Topical items and views on the impact of digitisation on publishing and its content and the issues that make the news. This blog follows the report 'Brave New World',
(http://www.ewidgetsonline.com/vcil/bravenewworld.html ), published by the Booksellers Association of the UK and Ireland and authored by Martyn Daniels. The views and comments expressed are those of the author.
Details about the extent of the Adobe security snoop into
individual’s reading habits and harvesting of data is becoming clearer and the arrogance adopted by
them over what is personal data would appear to many to raise the question as
to whether they are fit to manage many services digital content.
There explanation of what they monitor conveys no remiss and
some would say carries the usual ‘read the small print’ caveat and even more
interestingly appears to blame publishers and others for asking for those controls
even though many appear to be naïve to the fact that the controls are not only
enforced locally but that the information about them is sent back to Adobe to
The information has been confirmed by a number of sources to
be unencrypted and therefore open to potentially many parties to read or intercept
which in this day and age beggars belief and is clearly any responsibility or
care. Their privacy statement can be found at Adobe
‘Is my Personal Information Secure?’ states:
‘We understand that the security of
your personal information is important. We provide reasonable administrative,
technical, and physical security controls to protect your personal information.
However, despite our efforts, no security controls are 100% effective and Adobe
cannot ensure or warrant the security of your personal information’.
We all understand that many services such as Kindle,
Overdrive, etc synchronise our reading such to assist our being able to
continue to start where we left off. We respect that there is a wealth of
information that goes with that. But these transfers are secured and not open
and remain within their walled gardens. Anything that resides in Adobe’s
Digital Editions 4 library appears fair game to Adobe snooping and data
harvesting, even documents and non DRM ebooks!
Adobe may now find itself under pressure from large library services
and others to explain their approach and given their ACS4/5 history, the solid umbilical
cord to ADE and their apparent approach to ‘act first think later’, some may now
be prompted to look at alternative options. However that in itself is not an easy
route. It is also clear that this is not an old data harvesting feature but
only applicable to ADE4 and probably tied to the ACS5 features they are desperate
to get adopted by all.
It is sobering to think that they know and send via an open
·Unique User ID which aligns to registration
·Device ID to restrict number of devices re DRM
·Certified App ID to ensure only certified apps
(licenced sales and rentals)
·Device IP to determine geo-block
·Duration of reading to meter reading against
·Percentage of the Book Read to enable publishers
to align to subscription models and determine if the book has been ‘read’
·Date of Purchase/Download
·Distributor ID and Adobe Content Server Operator
·Metadata provided by Publisher (title, author, publisher
list price, ISBN number etc)
It is also reasonable to ask why the new controls aren’t performed
at a local level by ADE4 and why the data has to go back to the mothership at
all. Surely if the publisher states x, y and z rules these can be enforced locally
and the only validation required is at the offset to stamp the file as genuine?
Perhaps that’s too simple and perhaps Abobe feel that would loosen their tight
control and not give them that rich seam of data that they could………
The question of privacy on the internet has once again
raised its head with the posting by Digital Reader on Adobe’s ACS DRM system
and what is claimed to be excessive data gathering of personal information from
We can’t comment on whether the facts as presented are true
or false, but we are able to say that if true, they are a significant shift
from where Adobe started from and seriously question the role of DRM and
whether consumer privacy rights have been breeched.
Abobe DRM history goes back many years. ACS3 was widely used
by retailers but effectively broken and open. The start of the latest ebook
revolution was initiated with the introduction of the eInk readers and when
Sony entered the fray they wanted a DRM system which would effectively give
them a march on the rest. Adobe also wanted to regain control of a space they
had clearly lost. Overdrive had also built a ACS4 beta that they were using to
control their market. We remember Adobe’s introduction of ACS4 and their lack
of market awareness and often rigid mind-set and coupled with Sony’s desire to
rule the world, we had many often fraught conversations with the two of them
but the rest of the market wasn’t ready and so they won the initial battle.
Years later it’s a different story and many have either migrated to their own
DRM. Amazon and Apple never did join and Kobo and Nook grew alternative offers
and Overdrive stuck with their own variant.
Adobe then went into what can best described as the Dark
Ages where they still championed interoperability, but where leaderless and
gave up trying to manage micropayments and gave this up to a small handful of
agents who managed the retail facing activity and collected the money. They
then came up with ACS5 or a tighter model which was part born out of the fact
that ACS4 could easily be broken by anyone who asked the right questions on the
Internet and part by the fact that they were clearly being squeezed out by the
big channels. Unfortunately ACS5 has some basic issues which forced Adobe to
retract their initially statements and backtrack on their timelines to force
full migration to the new platform.
So today we have the news that Abode appear to be data
gathering consumer usage information at title level and also at library level. What
was read when, what wasn’t read, and probably much more? Is this right or
Well Adobe provide a DRM locking service aimed at validating
ownership and stamping this such that they can ensure rights are managed with
respect to devices, etc. Why on earth do they want to gather data on usage
other than to sell back to publishers, retailers and libraries. Did they offer
and opt in, or opt out to consumers is a mute question and we would suggest
that they had to in order to snoop.
They apparently doing this not through the standard
interface with hosting sites but through a mole application in Digital Editions
that they plant into the consumer library or device. We would like to see the
snooper application flagged as unauthorised by the security systems and users
being given at least the choice of allowing it in. Whether the Adobe service
will work without the mole is an interesting question.
We have to accept that Amazon, Apple, Nook, Kobo and
Overdrive all can gather information on their consumers and their walled
gardens allow this, but they are walled gardens. Adobe promotes itself as open
and interoperable and importantly does not have consumer customer relationships
to build in the same way. Again it begs the question what do they intend to do
with this information and is it being resold and if so to whom?
However, all this a new news and we await more information
about Abode’s intent and what is behind the intrusion into consumer’s private
libraries and reading habits.
Personally, if the facts bear up to what has been reported,
then Adobe has single handily done more harm to DRM than all the articles every
written about it. Consumers if made aware of it will probably shun and question
the violation of their privacy.
Finally, we hope that the wider media picks this story up
and fully investigates it and if collaborated exposes it to the consumer.
This week Amazon added another layer to their offer, a new ‘crowdsourcing’ book submission one, which as with all things Amazon today, immediately
polarised many. The lure is to attract would be authors into what some would
call a digital slush pile 'X factor’ competition, where readers vote and those works that get the votes, win and potentially get selected for stardom and the recognition their authors want. Under the new service Authors will be asked
to submit never before published works. Amazon will then make available a preview
of the work and enable readers to review and nominate their favourite and the
books with the most nominations will then be reviewed by the Amazon team for
potential publication. It is unclear when and if an author can flip a non-selected
submission into KDP, but we suspect that will be on offer and provide an added
So does the following have an impact on readers, an author, an agent, a
publisher and Publishing?
Guaranteed advance & competitive royalties: You
will receive a guaranteed $1,500 advance and 50% royalties on net eBook
Focused formats: We
acquire worldwide publication rights for eBook and audio formats in all
languages. You retain all other rights, including print.
5-year renewable terms, $5,000 in royalties: If
your book doesn’t earn $5,000 in royalties during your initial 5-year contract
term, and any 5-year renewal term after that, you can choose to stop publishing
Easy reversions: After
two years, your rights in any format or language that remains unpublished, or
all rights for any book that earns less than $500 in total royalties in the
preceding 12-month period, can be reverted upon request – no questions asked.
Early downloads & reviews: One
week prior to release date, everyone who nominated your book will receive a
free, early copy to help build momentum and customer reviews.
Featured Amazon marketing: Your
book will be enrolled into the Kindle Owners’ Lending Library, Kindle Unlimited
as well as be eligible for targeted email campaigns and promotions.
What is different about this new offer to those offered in
the past by some publishers and 3rd parties? Is it any different to
say Author Solutions? What does Amazon offer that others don’t?
We may need to step back and stop seeing these offers from
Amazon as individual offers and start to see them as part of an overall offer
which may even go further than just books.
They already have the market share of physical and digital
books and in doing also have the largest known customer base and information on
their buying, browsing and taste. They
have the largest digital self-publishing share with not only KDP but also
Create Space and Audible. They make money on KDP and have probably done more
for self-publishing than all the exploiting services that went before and can even
boast some significant successes. Authors love it because it is transparent,
rewards are high and they have a huge potential audience they can reach.
What this new move potentially does is move Amazon into a
strong position to exclusively capture new talent and win their publishing rights, provides
a feed to KDP as well as Publishing and adjusts the reward and rights benchmark
both in terms of reward and importantly term time rights. The later can’t be
overlooked as it is a major move away from the exclusive and some would suggest
‘in perpetuity’ aspects of the traditional model. Couple this with Amazon’s
ability to make all activity transparent and remove those old Chinese royalty walls and
there is a certain appeal for all.
Can others follow? We doubt that anyone today has the market vision and offer, reach, breadth and ability to leverage money on top of existing money in this way.
We remember well the lucrative STM journals market and the
value added role the subscription agents had carved out consolidating
subscriptions across thousands of institutions and publishers. It was a classic
one stop shop and rewarding for all parties. The likes of Swets and Ebsco dominated
and their position looked increasingly secure. Then came the shift to digital
and new players who also offered digital consolidation, publishers who wanted
to increasingly deal direct and institutions who discovered the power of buying
consortia. The market shifted and that was without the ever growing debate on
open access and the commercial model that underpinned the market.
This week Swets filed for bankrupcy with its parent company,
Swets & Zeitlinger Group B V, being granted preliminary bankruptcy
protection by an Amsterdam court and its payment obligations to creditors
frozen and JLM Groenewegen appointed as liquidator. The reason for the
fall from grace has much to do with the decline in revenues, squeeze on margin
and their inability to service their financial covenants. In good times many
borrow and to expand, but in bad times the cost of servicing that debt can
cause issues and their 2013
Annual report clearly shows many of the warning signs of a company that was
still earning, but not at the rate it needed to. Most companies at that stage
would take measures to ensure covenants were not breached, or refinance to
change their terms. We don’t know what was undertaken, but today that is immaterial
as they are bankrupt.
Swets were founded by Adriaan Swets & Heinrich
Zeitlinger in 1901. In 2007 Swets acquired by a Dutch
investment firm, Gilde and went to open offices in India, New Zealand, Finland,
Austria & Switzerland, China and acquire Boekhandel E. Frencken BV. In 2010
they broadened their offer with an e-book catalog and buying options, supplying
over 1 million e-books in 2011. In 2011 they acquired the publisher
communication services company Accucoms, They had some 572 employees has offices in 20 countries handling subscription services for some 8,000 customers and
800,000 subscriptions in some 160 countries. (see swets.com)
How much publishers have lost is not clear, neither is the
position of digital services to institutions, but Swets demise will have a big
impact on those who relied on that consolidation and alternatives may be around,
but as they say. ‘once bite, twice shy.’ Some major publishers have already issued
notices some stating that they have not received any 2015 subscription payments
for 2015 from Swets and inferring that there may well be money in the pipeline.
The STM Journal market is essential for the dissemination of
research and information and has long been a moral and commercial battleground,
but it is changing and being challenged not just by academics and institutions who
want a better deal, but also by what are often the primary funders –
Digital Music News have taken RIAA data and produced an interesting animated graphic
changes in music purchases over the last 30 years. We strongly recommend that
you view this as it shows how transient some technologies are and how it’s not
just the technology that changes but how people buy and relate to media.
It would be great to be able to step forward and predict
what will happen in the next twenty years but many of us would be struggling to
see further than the next five years.
What is interesting is that the base content hasn’t
radically changed, a song is a song and a recording is a recording and music
made decades ago now lives comfortable alongside that made yesterday. In some
cases the technology actually impeded the quality of the recording and forced
the extremes to be toned down to fit.
The other interesting thing is that emerging music
format technologies cannibalised their predecessors.
Cassettes replaced vinyl,
CD replaced cassettes, downloads replaced CDs and now streaming is replacing
even downloads. We are moving to music on demand which is either paid for through
other means, or is on subscription. This changes the question of ownership,
collections, sharing and of course the reward earned by musicians, writers and
producers. It also can change how we protect or identify usage rights and copyright
ownership and some would suggest that the new technologies are more secure than
all the belts and whistles of the early music DRM days.
If we produced a similar graphic for books, newsprint, film,
tv they all would be different and we need to understand why and what similarities
there are. Film and TV are probably the closest to music in the technology step
changes, but differ in many other upstream ways. Interestingly the original formats
of books and to a degree newsprint aren’t going away and it is easy to see
books as the most resistant to technology.
However, all bar newsprint, show very similar patterns to
the consumer trend from ‘buying to own’ to ‘subscribing to access’. Yes, the sectors
are often moving at different speeds and even different directions but the
trend is clear. DRM as we know it today is transient and past its sell by date
and will become increasingly irrelevant in a streamed world where it happens
albeit less obtrusively.
Therefore some would suggest that the challenge for book
publishing is not the latest tablet, ereader, smartphone, app, enhanced ebook,
but how we accommodate subscribing to access alongside the traditional buy to
own, enabling both to flourish and appeal and importantly reward creators.
Many saw Print On Demand (POD) as the ultimate ‘just in
time’ production solution to book publishing, which would wipe out all the inefficiencies
of the ‘just in case’ approach that plagues the book supply chain. So why didn’t
it happen, or did it happen for some and not for others? Is there a new dawn,
or just a new set of people who have been sold a pup and not looked hard at the
Today we read that Barnes and Noble are installing Espresso
Book Machines in three of their store, including their New York flagship in
Union Square. Books-a-Million also has installed two in its stores last year
and Powells has one in Portland. But are all these genuine investment cases or
mere subsidised trails?
We are all aware of the huge success Ingram have made
with Lightning Source both in the US and UK and the substantial side benefit
this has given them with Ingram Digital and in acquiring digital content. Some
would suggest that other more single focused operations such as Rowe’s in the
UK have been less successful and in general, the main production presses have
continued to plough their own furrows. Amazon acquired Booksurge which has now
morphed into CreateSpace and has been aligned closely with their Kindle KDP and
Audible self-publishing offers. In 2012 Kodak entered into the space with a
strategic alliance with Espresso to site POD machine in non book outlets to
also service their picture kiosk offer and although two machines were installed
in Bartell Drug Stores near Seattle, this apparently has failed to impress
In the UK Blackwells installed an Espresso POD machine in
their Charring Cross store. There were many mistakes made, with the machine not
only taking up valuable retail space, but often being unmanned, as staff wanted
to sell books and didn’t want that ‘monitor’ position. The customer also had to
often wait, either for someone to operate it, or just for a book to be spat out.
Best of all, they had so much faith in its ability to drive sales, they tried
to hide the machine around a corner. They didn’t know its audience and it was
poorly marketed both within the store and to a wider audience.
The challenge is not the technology, it’s with its adaption
and adoption, subsequent return on investment for all and perceived added consumer
value. It’s also like eInk technology, in that it looks great and is capable of
delivering, but if it takes too long, or the wrong strategy is adopted, it can
be overtaken and merely becomes transient technology.
Many suggested that POD would solve many environmental
issues but we would suggest that they first may wish to also look closer at the
technology and paper stock used in the current machines.
The challenge is that POD means many things to many
To some it is a substitute for short print runs. One
academic publisher very successfully could predict sales of its back list, so it
set thresholds at which POD kicked in and replenished inventory according to
forecasted demand and in doing so kept high priced books in stock. It even only
had one location worldwide to service distributed hubs and they could afford to
fly it around the world once sold. POD can work on predicable sale patterns and
high ticket books.
Others waited until the backlist book inventory hit the
bottom and operated on sell one make one basis, again ensuring the book
remained in stock and obviated the ‘reprint under consideration’ lost orders
and print gambles.
Some printed more POD stock than was healthy and used
POD to simply reduce their print run exposure and inflated the price to pay for
this higher ticket item. Interestingly, ask those POD operators if the print
singles or bulk orders first? Also like any machine they return the best
investment if they operate flat out and not intermittently between the hours of
9 till 5.
However, the big challenge for many was the basic model.
All tended to stick with the print and distribute model and this was
personified by Ingram who printed and then distributed, either on a pick, pack
and dispatch direct to order, or more frequently indirect to stock. The real
opportunity was to flip from ‘print and distribute’ to ‘distribute and print’
and bring the manufacture closer to the consumer. But to do so one now has to
ask what is ‘local’ in a world were delivery is shrinking to same day?
So why do we think that the Barnes and Noble ‘test’ is irrelevant?
Firstly, unless the service is perceived as universal then it has questionable
marketing advantage and real cost and service issues as there will be more ‘only
available at limited stores’ and less ‘available here.’ We don’t envisage a
return to the 17 and 18th printer within the shop and the machines are not
going to shrink to a desktop today. We do however see it working within institutions
and public libraries who often have different needs, service offers and return
on investment critique.
So who could be a winner apart from Ingram? Well this is
yet another lesson being taught by Amazon, who, by reducing their delivery
times to even same day, have potentially removed the ‘local’ issue. If the can
buy online and have it turned around in the same timescale as a traditionally
printed book, will the customer care if it’s POD or traditional? Amazon has
also gone for the classic sell one make one model that aligns to self
publishing and positioned it alongside KDP and their Audible self publishing
offers. Tomorrow they are in a great position to now offer the same service to
publishers and retailers who wish to reduce stock but increase availability.
Maybe Booksurge was a very canny buy and under CreateSpace can become another
part of an increasingly well thought through and formidable holistic offer.
We have long argued about the logic of joining up the media
dots. Some see this as merging the technology and using one technology architecture
to deliver all services. Others see the services as remaining separate and
simply offering a ‘one stop’ consumer umbrella, which collectively makes it
difficult to compete with.
This week Amazon has acquired games streaming service Twitch
for a cool $1 billion ($973 million). Twitch claims to be the fourth largest generator
of peak load Internet traffic, which is greater than Hulu, Facebook and
Amazon. According to Twitch it has
quickly become the go-to-platform for the fast growing video game-streaming
market. In July they claimed some 55 million unique monthly viewers.
Amazon’s media offer now includes physical books, ebooks,
singles, print on demand, rare and used books, audio books, lending and
subscription services streamed music, CD music, downloaded music, film rental
and streaming, games and game streaming much much more. When you recognise that
these can all be offered under one subscription service, Prime, as either
supplemental services or the main offer, the picture changes. Kids Free Time is
the only service Amazon has collectively offered under one proposition and subscription,
but it isn’t hard to see many more such offers. Prime also unlocks the world of
Amazon’s marketplace, goods of all sizes and shapes and a growing digital offer
and physical delivery service which has collection points, same day delivery
and again much more.
So is about building a ‘one stop shop’ and owning the
customer’s first point of choice and if Amazon hasn’t got it, then its
marketplace probably has. This now begs the question of why we bother to search
on other services and don’t just go to Amazon first every time. After all, we
will be soon conditioned to believe that that’s where we will probably get the
best deal on everything and anything. Amazon gets first crack at unlocking our
purse and getting our money and if the sale goes elsewhere through marketplace then
they still get a cut.
So what about media and content? We know Amazon wants to
take out the middle man. It is also becoming a producer, publisher,
commissioner and much more across many media forms and not just selling books,
films, etc. Does it want to be the only one? That would not make sense and
would be unrealistic, but it will go for the quick wins and importantly go to
win the hearts and minds of the self-publishing and creative-direct route.
What we have is an omnivore, which in its habit is creating
a compelling consumer and creator proposition which is hard to avoid. No one
only reads books, watches films or plays games and fighting a beast gets harder
when it’s not just about one offer. Importantly the sum of the parts is its
strength and that is not just with consumers, but with its competitors.
Competitors and providers who have only a slice of the offer, have just that, a
slice. They have to do that not only better than Amazon, but better than the
rest who are fighting for that space. Niche is fine and can be very profitable,
but it is just niche and growth is limited.
If you want to grow outside of the niche you have to find
others who can help replicate what Amazon is doing internally. That’s Amazon’s
potential weakness in that it has brought its offer inside. The companies may
well operate separately but they are owned by Amazon. To compete then someone
has to collect the same, similar or others into a group that acts as one but
who remain separate. There are many opportunities but often little or limited
vision or appetite for co-operatives.
To those who are searching for the synergy between Twitch
and books and other media, forget it. The game is about creating a unique,
compelling and universal offer and if it also provides some synergy then that’s
How do industry bodies and major players respond to new
entrants who offer something different? Do they go out to squash them in order to
maintain the status quo? Do they attempt to reign them in and restrict their
influence and impact? Do they invest in them and work with them to create new
channels, new markets and new revenues? Some believe that many stick their head
in the dark and wish them to go away?
This last week we have all read the Amazon
Press Release over their ongoing battles with Hachette and one of the most relevant
statements came right at the beginning in their reflections of the current
A key objective is lower e-book prices. Many
e-books are being released at $14.99 and even $19.99. That is unjustifiably
high for an e-book. With an e-book, there's no printing, no over-printing, no
need to forecast, no returns, no lost sales due to out-of-stock, no warehousing
costs, no transportation costs, and there is no secondary market -- e-books
cannot be resold as used books. E-books can be and should be less expensive.
The somewhat throwaway line that caught our attention was
that, ‘there is no secondary market ebooks cannot be resold as used books.’ With
the revelations earlier this year about Amazon’s used ebook patent, we know that
it has had its eye on this opportunity, but that the first sale doctrine is
maybe a battle too far today. But used ebooks are almost certainly to happen
and the change will be either driven by consumer demand or other start-ups who are
prepared to push the envelope. It took the likes of Waterstones, Dillons and
others some three years from starting to discount in 1991, to the collapse of
the Net Book Agreement in 1994. It took years of patient lobbying for the B&Q
and other large UK retailers to open up Sunday trading. It took years to change
UK licencing laws. Things change in time and they change in favour of public demand.
Last month a judge for the District Court of Amsterdam ruled
that Dutch used ebook reseller, Tom Kabinet can continue to operate while it is
being sued in court by the Dutch Trade Publishers Association. Tom Kabinet enables users
to resell DRM free and digital watermarked ebooks.
The Tom Kabinet site
takes a 10% commission on all ebooks sold and have offered to pay a 5% royalty on
all sales to authors for each ebook sold on their marketplace.
Kabinet like the used l digital music service ReDigi are also up against
EU legislators and a strong lobby. Although ReDigi is still in operation today,
and have been awarded a patent earlier this year for their
marketplace platform they have had to adapt their service in light
of losing legal battles.
When Napster first threatened the music production business,
the industry fought back through the courts and set out to shut down the new file
sharers. The propaganda PR and lobby machines were wound up and the sound bites
and messages broadcast. The political lobbing started as the industry set out to shut down the new file sharers
before they could establish themselves. The problem was Napster was free and
consumers made it go viral.
The music industry won its battle with Napster, but then had
others to deal with who had watched the Napster battle and learned new tactics.
Although the music business kept winning they also kept losing and by the time
they tried to get the Napster brand under their umbrella it was too late and
the stable door was wide open.
The music streamers came next. First there was Spiral Frog
who failed to deliver, but they were followed by Spotify and Pandora who did.
The big music producers had learned some lessons and bought into the service
but also tried to tame it and minimise the risk to their model. However they
failed to understand that the threat wasn’t free, nor was it sharing, but it
was about the whole ownership ethos that they had profited from for decades.
The streaming services asked why you needed to buy when you could access on
demand, from anywhere at anytime. Spotify with its 24 million users, of which 6
million are subscribers and the other services started to redefined ownership
and how we paid for and listened to music.
It’s amazing how long the music industry took to include
downloads into its charts and that they have only just opened the door to
include streamed music. Today 228 million downloads happen across the various
services every week in the UK and that is up from 142 million in 2013 and 67
million in 2012 (Official Charts Company). The maths of how many tracks on
average people download a week, is not hard to calculate and is significant. Some
41.5% of singles are streamed and 12% of the current top ten are streamed. The
UK alone has delivered a staggering 18.5 billion streams and in 2013 overall
market revenues from streaming pasted the $1 billion mark for the first time.
Interestingly, while streaming has experienced explosive growth the overall
revenues of the global music market have only increased by a mere 4.3% (IFPY
We wonder how long it will be before they fully recognise
the impact YouTube has made and that some suggest that more kids now watch
their music today than listen to it. Interestingly, the success of streaming is
negating the demand for used digital sales and in a market where growth is
clearly in a new ownership model enabling secondary sales makes sense and will
generate further income for artists.
Change will happen and denying used digital media a second
life and sale will increasingly be seen as wrong and an untenable position by
the people that matter the consumers. Denying a second income opportunity also
impact creators at a time when their own first sale income is increasingly not
meeting their expectations and the pool is being shared with even more fish.
Unlike music, ebook consumption is relatively low and prices
relatively high and this will reduce some of the appeal of on demand ebook subscription
services. The book market will remain a mixed economy for the foreseeable
future with physical, digital, see through and subscription offers. Perhaps it time that publishers work with new
stat-ups to create and support a thought through and complimentary used ebook
market and not wait for the collapse of the restrictions they have today and
the chance that the result may not be favourable.
The problem with any open confrontation is that often things
that were really said in public have a habit of rising to the surface and
becoming public. Public Relations people then try to put them back into the box,
or rationalise the issues, but often the damage is done, or the public’s
perception has changed. Propaganda is a powerful tool when communicated
Today’s standoff between Amazon and Hachette is becoming
increasingly visible to the public. Some would say that the majority of book
buyers are more concerned about getting the right price and service for
themselves than they are about the trading terms between publishers and
retailers. This makes sense and for many it is as if this battle is taking
place on another planet. But then we introduce the emotive strings and issues
that attempt to sway opinion. Not many care about the plight of the main protagonists,
but introduce the authors and that changes things a bit. One side infers that authors
are being exploited, and the other also says that they are being exploited or
harmed by the action. Some would suggest that the author is are mere pawns in
The statement is logical from Amazon’s perspective and makes
arguments for lower ebook prices, which reflect the reduced usage rights, plant
and distribution costs. They suggest a price point of 9.99, but also recognise
some books will cost more. They put forward their revenue model split between
themselves, publishers and authors and then say we’ll give you 70% and you guys
can sort it out the division between yourselves. They argue that lower prices
increase volume sales which in turn create greater revenues for all.
What Amazon have subtly done is drop a PR bomb into the
publisher lap. They have questioned the royalty paid to authors, knowing that
their suggestion is higher than what publishers gives. They have started to
make the public more aware of the differences between the usage rights costs and
pricing of ebooks, and in doing so promote themselves as consumer champions. This
interestingly moves the debate into the public arena and starts to set the
public argument and seize the public initiative.
Can the publisher respond effectively and seize back the
propaganda war, or will they aim to muddy the waters and strike back with a fresh
angle of attack?
What we are seeing can only benefit two people in the end,
the author who will demand more and whose case is being strengthened by the day,
and the public who will get cheaper books as the ebook RRP comes under
pressure. Will it benefit Amazon over others, or will others benefit from the
stance taken by Amazon? Will others step in and try to broker a deal or will Amazon
simply and suddenly capitulate knowing that they have already scored their points
and leave the fight for another day?
Battle lines are being drawn in the digital book arena and
these are changing both in terms of goals and measures of success. The changes taking
place may appear relatively small and tactical today, but their impact could be
significant over time. How long they will take to deliver change is questionable,
but that they will, is inevitable.
Although there is much noise in the market and many are merely
shouting about what they are doing and it’s often hard to determine noise from
substance and authority. It is also has to be recognised that different sectors
have different issues and drivers and nowhere are there any silver bullets.
We would suggest that are five shifts taking place with the
Trade environment. These are all at different stages of evolution and moving at
different speeds, but will spawn more change.
Interestingly, as the overall
digital market will be shaped by all of them, it may not be wise to simply
cherry pick the ones you think apply to you and ignore the others.
We are now starting to see the emergence of serious players
and offers. Interesting, they have all pitched the consumer reading demand at
the high end and made ‘one price fits all’ offer.
Subscription offers need to
be geared to individual needs and yet encourage members to read more. Just
having the biggest library to choose from and expecting readers to consume 3
books a month is not the answer and niche genre offers are essential as well as
recognising variable reading demand patterns which will keep members hooked. Today
the churn rate is unknown and we suspect it will be quite high in the initial
period and therefore these services need to develop secondary community draws
to compliment and add subscription value and not merely appear as one trick pony’s.
We would expect them to follow other media subscription services and align themselves
to larger and complimentary subscription lists and this is essential as long
term as subscription offers continue to consolidate their customer facing
The old and somewhat irrelevant buy to own model that prevailed
in the physical market is fast becoming exposed. Although we have yet to see
the ebook used market happen, with only the Dutch service Tom
Kabinet is challenging the courts, it is inevitable in a highly restricted
However as used books, DRM,
watermarking and on demand streaming services all overlap, maybe the emergence
of on demand means that we no longer have to test the first sale doctrine and
the used ebook market never happens. But unless on demand occurs, the used sale
market potential for ebook is bound to be tested and found wanting and it is inevitable
that the courts will eventually fall on the side of the consumer.
One of the challenges is about proving ownership, which with
DRM should be easy, but with the current DRM walled gardens is almost
impossible. Again with watermarking it should be also possible, but without a registry
and standards conformity, is again almost impossible. With no DRM, no
watermarking and no registry some would suggest that this is like closing the
stable doors after the horse has bolted.
We are firm believers in the democratisation of writing which
is currently exploding in the digital market and will continue to grow for the foreseeable
Self publishing is no longer about the slushpile of aspiring
writers all wanting to be the next EL James, but about the ability of anyone to
bypass the intermediaries and express themselves and publish their works. It facilitates
small publishing ventures as well as new and established writers. They may
select to use outsourced services to polish and refine their work, or simply publish
It challenges the ability of the intermediary to control what
is being bought and read and can level the marketing playing field. The
bestseller will still be a bestseller, but increasingly the backlist and
midlist authors will now have to do more themselves to promote their works and
in doing so find themselves head to head with others who have self published
and earn a greater percentage of the revenue they have generated.
Can traditional publishers use the self publishing services
to feed their lists, or have they now lost that opportunity? Maybe it’s down to
the value they will offer the writers and that may have to be more than just a ‘safe
home’ and a brand.
As author earnings continue to be squeezed by net receipts,
reduced advances and more competition, the publisher profits from digital have
been seen to grow. Maybe the widening gap is down to bad PR and communication,
but the writers are increasingly aware and continue to be the ones who create
the initial value.
One area that is very visible to authors under the KDP and
other self publishing services is their sales reporting and revenue payments. As
the authors will demand greater transparency on earnings, speedier payments and
an increased revenue share, there becomes less hiding place for publishers.
Publishers do add significant value, but now have to
increasingly demonstrate this and one potential knock on effect will be a
revision of digital rights to term based and separation of these from print.
Content, Context and Community
In the main, the market continues, to merely pour the
physical content into a digital container.
Some would suggest that this is
short slighted and ignores that it is just a transient step and some would even
argue is the equivalent to performing self-harm. We don’t say that all ebooks
must go down the multi media experience route, far from it, but that we should
be thinking about the user experience and making the digital rendition complimentary
and not just substitutional.
Digital also offers significant opportunities to grow
author, genre, reading and writing communities. These may be devolved to others
better suited or motivated to organise and curate. Digital also expands the
ways in which works can be discovered, validated and valued which applies to
both digital and physical renditions. It is no longer about describing books to
place them on dry one dimensional shelves, but about enabling them to be found in
many ways within a virtual environment. Standard bodies think library and
bookshop shelving, but today’s buyers don’t.
Too many what we have said, is not relevant to their
business today. They may wish to sit on the fence and wait for it to happen and
expect that they can respond quickly. To others they see these changes
happening, new opportunities and the ability to position themselves for
tomorrow and not run the risk of being too late to the party.
Today, the market is talking about the Amazon offer, Kindle
Unlimited, which certainly is a smart name as it aims to do exactly what it
says on the tin. It should come as no surprise and it was only a matter of time
until Amazon entered the ‘all you can read’ ebook subscription arena that services
such as Oyster and Scribd have started to open up.
We have long argued that the subscription model is coming
and that it starts to change how we relate to books that now can be effectively
‘borrowed on demand’, without having to worry about collecting them on virtual
shelves, kidding yourself that you own them when all you own is a limited licence,
and also trying to work out how to pass them on to others, share them, or
divide the family collection when a relationship splits up.
The greatest challenge to the subscription market is
matching the economic model to the reading habits of the members. The book clubs
of old used to force feed ‘book of the month’ and expect a regular purchase,
but they were dealing with relatively more expensive books and accepted that many
people didn’t read on a regular rate. Importantly publishers often had Book
Club royalties written into their author contracts. We now have ‘all you can
read ‘models which are based on a flat monthly rate with an open to read offer
against a digital library. Book s only earn when they are read and ensuing the
definition of ‘read’ is a relatively minor but interesting issue.
Unlike other media subscription offers in music and film and
even audio the demand and usage patterns of ebooks are very different. An ‘all
you can read’ model may appeal to high volume readers who actually don’t need
an incentive to read, or buy books and probably read a high volume of what they
buy. It doesn’t necessarily appeal to readers who have a more erratic habit, or
who collect ebooks today and don’t get round to reading them. So churn rates
will be very important both in the early days and within the subscription
cycles and will be probably very high compared to other subscription services.
Amazon launched Free
Time in the US some 18 months ago. The service was aligned to their Prime
subscription model and offered access to several media forms and importantly
was aimed at parents for their children. It is not clear how successful this
offer is today, but it did have all the right ingredients and if it were
extended to align with Unlimited would make commercial sense. Amazon will have
learned a lot from this exercise and obviously have a huge volume of customer
information and reading habit data to mine and exploit. Unlimited would potentially
give ‘family’ offers which cross media, align with Amazon’s core Prime service
and effectively lock in customers. Importantly they will be very difficult to
compete with as others would appear one dimensional and limited in their
potential. However the economics of such an unlimited cross sector offer would
be complex and maybe a bridge too far with suppliers today, but Amazon will
have learnt much from Free Time that others have yet to discover.
Amazon has aligned Unlimited to their Lending Library and
those publishers and authors who opted for this service channel now are automatically
lifted into Unlimited. A smart move by Amazon and one that gives them instant
traction with both content and users.
So is there room for Amazon, Scribd, Oyster and will Kobo,
Apple and the ailing Nook follow? What will Wattpad do now? Can Amazon extend
the Unlimited offer to make it even more compelling with premium offers on
audio, film, music and even cloud services?
We just can’t see sufficient market for all players as they
are position today and it will be interesting to watch the strategy adopted by
others. Amazon’s Achilles heel has often been their loner approach and there
are many huge subscription services that could be seen as complimentary for
others to align with and thereby protecting themselves from being seen a ‘trick
What’s in it for publishers? What’s in it for Authors? How
do digital distributors such as Ingram respond? How does this impact the public
library debate and services such as Overdrive? There are many unanswered
questions and we are only at the start of a journey which will have many
barriers to negotiate, but we now are starting to see a divide between physical
and digital which may prove to be healthy. The books may unfortunately remain
the same but the divide between ownership and licence, between buying to maybe
read or as a gift and subscribing to consume, an incentive to read more as
opposed to decorating physical and digital shelves is now potentially up for
This is a good thing for consumers who read. It could be a
good thing for digital media users. It may get more people reading. But there
are others within the value chain for which this move has many uncertainties.
in a quiet small local market in Bath we came across two stalls which caught
our eye. One was selling lampshades at £75 each and the other origami objects.
The thing that was interesting was that both were using printed books as their
base material and draw.
used a pile of books as their base which had a hole drilled through them in
order to support the shade and fitment. The stallholder commented that several
people had objected to her wares and that she was finding it difficult to get
the books as charity shops wanted to sell them or they were destined for
landfill. She roughly had desecrated some 100 plus books just to create the
lampshades she had on display. We quite like the look of the leather bound set
of short story books but they were now holed.
The Orinoko origami
stall obviously had no problems getting hold of stock to cut up and fold as
they proudly worked in partnership with BookBarn International who were
advertising themselves with flyers claiming, ‘Invest in the future of books!’
Orinoko proudly state, ‘choose the book you want from any Bookbarn
International stock and get a 20% discount off the book.’ No doubt they buyer
then brings their book along to Orinoko to be cut and folded into art. Some
would suggest that this is not investing in the future of the book.
Last week we
wrote about the British Museum’s ‘wheel of books’ and questioned the subliminal
message it was sending out about printed books and art. Now we have further
examples of books being used to create art in the best possible taste. But is
the real future of the printed book?
libraries and book collections used to define the owner’s taste, likes and
reading but tomorrow will these be desecrated to reflect their art taste and
regard for the printed book? Unlike landfill and pulping these new fashion and art
objects are for display. Once out of fashion they are of no use and become yet
more rubbish. But until then they will sit proudly on display no doubt
alongside the stuffed heads of shot animals and caught fish and other trophies
which define the taste of their owners.
Some will say we are party poopers and that we should applaud
and celebration the British Museum’s novel use of the book to create art, but is the ‘wheel of books’ just a cheap gimmick or we should we be mindful of what could be easily copied?
The British Museum’s newly refurbished bookshop got Lumsden
Design, who are based in East London, to create their space and engage
customers. At is centre is a two metre ‘wheel of books’ which sits proud in the
shop’s window. It has caught people’s imagination and has engaged, but is it
about promoting books for reading, or promoting them as objects of decoration?
Is it simply reusing them to create a decoration and a one off piece of eye candy which is in fact in
conflict with the objective of reading, or is it a subtle way to promote the book? After
all we often love to see shelves of books face out, or stood to attention with
their spines outs and is this any different?
What will be the legacy of the ‘wheel of books’? Will people
now buys books to glue them together or to drill holes through them in the
search of expressing themselves through art? Will schools now collect old books
so their kids can create art and forget to read them? Will this decoration
promote books as a tool for learning and an escape to fantasy or simply turn
them into objects to be twisted, broken, and stuck together in the search of
art? Will second-hand books now be snapped up by the yard to be experimented on in art classes and colleges?
We do applaud the other creations within the shop, which
includes tabletops wrapped in black leather to recreate the original writing
desks in the Reading Room where Karl Marx, George Bernard Shaw, Thomas Hardy,
George Eliot and Rudyard Kipling all studied. It has also embraced the Rosetta
Stone right down to the sales of merchandise such as umbrellas and cufflinks. But
it is the ‘Wheel of Books’ that causes us to ponder, with its metal ring piercing
through all the copies on the wheel, in order to keep them all in place just to create window art.
A few years ago
some industry bright sparks thought that instead of pulping books, or sending
them to landfill, prisoners in Her Majesties prisons should drill holes through
them and in doing so stop them being resold, reread and shared. Thankfully the
move was questioned and shunned, but today have we now discovered the acceptable
alternative? Same result, holes drilled through the books rendering them
unusable, but this time it is all done in the best possible taste.
We have all read about the decline of the independent bookstores
in the UK and US. However, we have also seen the relaunch of Foyles in
Charing Cross, the expansion of the Hatchards brand by
Waterstones to St Pancras, the growth online of the bargain bookseller, The
Works. So what is the future of the Bookstore and does it have a vision of
itself in 2020, or is its vision somewhat out of focus and requiring both short
and long sighted correction?
Stanley Unwin once said that, ‘To write books is easy, it requires only
pen and ink and the ever-patient paper. To print books is a little more
difficult, because genius so often rejoices in illegible handwriting. To read
books is more difficult still, because of a tendency to go to sleep. But the
most difficult task of all that a mortal man can embark on is to sell a book.’
Today more than ever before that quote reflects the significant changes and challenges facing booksellers.Some would say that
the question of what is sold, is as important as that of how it is sold.
Today many continue
to sell not just a narrow range dictated by their physical square footage, but
a range focused purely on the new or only available through the publisher. It’s
as if they haven’t read what it says above the door and have ignored the word ‘bookseller’
and replace it with ‘new books only seller’. Books are books and the consumer
doesn’t grab a book and turn immediately to the copyright page and look as to
when the book was published, so why do so many bookstore restrict themselves? In
a market that over produces both in titles and quantity, there are many mint
condition ‘bargains’ to be stocked from outside the traditional publisher channel.
They may not have the ‘sale or return’ safety net, but they also can be often
acquired at a fraction of the price. One of the salient lessons we should have learnt
by now from the likes of Amazon, is that consumers want to buy new, old, rare, bargain
and used books and to do so from one place where they can seen the full range.
A recent article in
Economist looked to the future design of the bookshop and asked four firms
of architects and designers to create the bookshop of their dreams and in doing
so reinvent it for tomorrow. The designers looked at many aspects and even
covered the sale of used and digital books and using the space to sell
lifestyle, create theatre and host events. It is worth a read.
started from the premise that the hub was the bookshop and everything revolved
around the book. Is that how we should look at it, or is the book merely part
of a larger proposition based around a wider lifestyle offer? This obviously
raises the question of range both in terms of width and depth. We have seen
many acclaimed bookshops which have narrowed their offer to appeal to a segment
of the market, but how many of these have actually complimented their book
offer with a full range of products that appeal to that same segment? Does the
cookery shop sell cookery product and books, or books and cookery product? Does
the children’s bookshop sell toys, children’s clothes, prams etc. alongside
books, or books alongside childrens’ product? Ex Borders UK head, Phil Downer
has made his Calliope
gift shop one that sells gifts which include books and in doing so he is
able to cross sell and merchandise and adjust his offer to suit the market.
Will books be a major or a minor element in years to come will depend on many
factors, but ultimately it should reflect consumer demand.
The coffee shop
within the bookstore is often a very good earner per square foot and creates
lifestyle and greater selling opportunities. It is claimed that our obsession
with coffee houses is going to grow by a further 20% by 2020. So would you open
a coffee shop that sells books or a bookshop that sells coffee?
A further example
of how market trends have changed well established markets is in the off
licence sector, where the supermarkets have come in and not only wiped out much
of the previous retail space, but also have actually expanded and grown the
market. When supermarkets first started selling petrol it looked obvious and
was restricted to their out of town supermarket locations, but now some have
taken their supermarket offer to the garage forecourt and taken over independent
stations which are convenience stores that sell petrol and this has enabled
them to grow their convenience business and opened new locations miles from
Just focusing on
books is obviously a very limited consumer offer. Just selling new books could
Steve Bohme, Research Director at Nielsen, claims that of
the 80 million ebooks sold in the UK at a value of some £300 million, 18
million were self-published at an average price of £1. So whilst the volume of self-publishing
was a little under 25% of the UK ebook market the value of the sales was only
half that at some 12%.
There are many questions about these and other
self-publishing statistics. How much of the research is qualitative and how
much is quantitative? How much is actual sales of all self-published books and
how much is restricted to tracking industry identified book units (ISBN)? It is
easy to be subjective, but the actual detail often remains inaccessible and
therefore any statements and predictions often carry a word of caution. The
time old practice of measuring the market by number of new books published a
year, is becoming meaningless in this new virtual world, where multiple
renditions often exists and the front list, or ‘new’, is increasingly hard to
define. The industry failed to adopt the ISTC (standard work identifier) and as
a result relating different renditions can be a challenge. Separating out the
self-publishing titles is even harder as digital self-publishing is also not
restricted to authors and is being used by agents and small publishers and we
must not forget that it also includes print on demand channels such as Create
Space and even audio.
We are however where we are and it is hard not to appreciate
the massive explosion in digital self-publishing. This has been enabled via no
cost and self service programmes such as Kindle Digital Publishing (KDP). The
number of titles now taking this or similar routes to market is hard to
accurately measure and therefore too are the sales.
We understand some of the self-publishing drivers, but we often
lack the actual sales that are actually being achieved. Whilst some authors claim
huge sales, some works sit on the shelf untouched. Prices fluctuate from free
to a few pounds, but owners are often continually manipulating these prices in
order maximise visibility and sales. As a result prices, although low, are all
over the place, which in turn put pressure on the pricing of more traditional
Traditional publishing has developed, honed and established
processes, relationships and practices from the author to the reader over many
years. Although these characteristics may vary from sector to sector, in many
sectors the prevailing model still remains largely one based on spread betting that
is controlled by the publishers, where the winners compensate for the losers. Some
bestsellers may be manufactured and according to their marketing spend be hits
before they have hit the streets.
However, publishers are increasingly becoming
risk adverse and in doing so are potentially now shrinking the number of wild
punts they take.
For many readers the publication date has not been the buying
driver and ‘latest’ often only means the newest to be discovered, not latest to
be published. However, the publishers remain front list focused with what some
would see as a mission to discover the next ‘50 Shades’, ‘Harry Potter’ and
Christmas celebrity blockbuster etc. In the physical world the promotion and development
of the backlist does not always generate the returns offered by a new
bestseller. However in the digital world a strong and visible backlist can
provide stable and sustainable income with little cost. This potential quick
win is not lost on authors who have often got reverted backlists that are
potentially waiting to be rediscovered.
The size of the content of a title is still being driven by
the economics of the physical rendition. The distribution and metadata is still
conforming to the physical supply chain needs. The rewards, rights and
royalties remaining locked in a time warp as if digital never happened. We
still think in terms of library and bookshop shelves and not virtual ones and
restrict how we describe works to filling in predefined boxes. Digital books
are still often restricted to sitting on limited shelves even though their
appeal may be applicable to many genre. We are managing ebooks as if they were
pbooks which again is opening up opportunities for self-publishers to self-publish
and appear more relevant and focused.
The market share of digital to physical continues to be an industry
obsession and in part is driven by the majority of the physical book content
remaining identical to the digital with the physical content merely being poured
into the digital container. We have created a cannibalising engine which
although like other media will not entirely replace the physical, could seriously
undermine the supply chain economics on which it works today. However, this is
not the case with much of the self-publishing market which now sidesteps the
often uneconomic print rendition. So despite Amazon’s Create Space print on
demand service digital self-publishing is growing disproportionately to
traditional digital publishing.
Self-publishing is being championed by those who control virtually
all current ebook sales. The likes of Amazon, Kobo, Nook not only assign their
own identifiers and do not make the ISBN mandatory for ebook self-publishers
they actively promote their services for free with royalty rates that make even
the best publishing digital royalties look miserable. Yes, publishers can add
value by promotion, marketing, and generally help raise the visibility of their
works and that may be appropriate for front list titles and those released in
print but doesn’t always apply to back list, mid list which now find themselves
fighting for attention alongside increasingly more professional looking
self-publishing titles. It is very questionable why any author should allow
publishers to simply digitise their back list without term time break clauses
and a revision of royalty terms. The ebook services also add value to authors
in showing current sales activity, royalty earnings and even pay on a monthly
If we finally accept self-publishing is a growing force and
segment within the market, how do we relate to it, measure it and respect what
it offers authors and readers alike. Merely brushing it under the carpet or
closing one’s eyes to it is not the answer as this will only deliver
aftershocks and surprises. Locking authors into perpetual contracts for their
backlist as well as front list will surely only come home and bite hard. Paying
authors poor digital royalties that look to some greedy and to others just
stubborn will only increase the flow to self-publish digitally.
It is often one thing to identify the threat and another to
focus on the opportunity. Publishers are not structured to absorb
self-publishing and by their nature are selectors and curators. We now live in
an environment where anybody can publish a video on YouTube, perform their
music in the social network arena, review whatever, write blogs, stories etc.
This is to be embraced and supported and even though many still see it as a
threat self-publishing actually compliments and can enrich traditional media