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Evolution becomes Revolution

After I had read one book on a Kindle, I knew books had reached a new stage in their evolution. Digital reading offered so much in the way of convenience (portability, no space constraints, variable font size, wireless delivery, searchable text, tons of free public domain books) that it was bound to win converts. Sure enough, the Kindle, which was introduced as a competitor to the Sony Reader, soon had lots more competition. By the end of 2009, it seemed as if eReaders were popping out of the woodwork, like mice in an old house.

And as the Kindle sales began to build, sales of Kindle books began to grow in a noticeable way (Kindle owners buy lots of books; no one spends that kind of money on a one-trick pony unless they really like that one trick), and publishers finally began to pay some attention to ebooks, which has always been such a tiny percentage of their market that no one had really worried about them one way or the other. Certainly, very few publishers were making any effort to become familiar with ebook formats and what it took to produce decent-looking ebooks. One complaint of ebook advocates is the fact that so many ebooks have formatting errors— run together paragraphs, funky hyphenation, unreadable characters where diacritical marks like accents were used, etc. Whether that's the publisher's fault or Amazon's it's hard to say, but no one seems overly concerned about it except the consumers.

The pricing, on the other hand, got pretty much all concerned up in arms. Amazon wants to sell best sellers for $9.99 in the Kindle store at about the same time they release in hardback. Publishers are horrified at the idea. They make most of their money off of hardbacks; over the years, they have persuaded their customers that a hardback book is worth $25 or even more. But, as this discussion on ebook value on Teleread points out, selling the book later in paperback for a third the price already undercuts the idea of the book having that much intrinsic worth. Really, there are two things publishers are using to make a book more valuable: its newness and its format. But of course, some publishers release brand spanking new genre books in paperback, and they don't cost anywhere near $25. That leaves format as the primary price driver, at least to outward appearances.

Book publishing is not a highly profitable enterprise. Blockbuster best sellers make buckets of money (in spite of high author advances and deep discounts at retailers), but a lot of books don't even break even and most don't make a lot of money. It's difficult to predict which books are really going to sell well, and the print versions are saddled with a terribly inefficient distribution system: publishers guess how many books to print, bind the books, ship them to stores, and then get ready for disappointment, because the retailers can send books back if they don't sell.

You would think that publishers would embrace digital publishing for all its worth: no guessing how many to print, no shipping, NO RETURNS! But also, no $25 a pop. Ah, there's the rub. Publishers have revealed that although they have been charging three times as much for hardbacks, printing costs are a relatively small percentage of their costs. They say that producing ebooks doesn't really save them much, and they really, really , really wanted Amazon to stop discounting Kindle books because they were sure it would cannibalize sales of the hardcovers. Mind you, Amazon was paying them a percentage of the wholesale price the publisher set for the ebook, so they were still making money. But for bestsellers, Amazon would take a loss and sell the ebook at $9.99. Amazon discounts print books, too, but no one is screaming about that.

The irony to me is that this situation was often reported as "all Kindle books are $9.99." Totally not true. Plenty of non-bestsellers were over $9.99. I paid over $14 for Connie Willis' Blackout, less than $3 off the hardcover discounted price (I'm not usually willing to pay that much for Kindle books, but I will for Connie). Also, most often if a book was in paperback, usually the Kindle price dropped to about 10% less than the paperback price. Usually. Some publishers didn't seem to do that, though, and one of them was Macmillan, which includes the Tor/Forge imprint. Quite often for them the Kindle book would be slightly more than the paperback.

eBook consumers are not buying the publishers' math. They are adamant that they should not have to pay anywhere near as much for books they can't give away or resell when they finish them. Many are beyond adamant and in some cases have moved on to frothing at the mouth. Just check out this thread on the Kindle user forum about the recent standoff between Macmillan and Amazon. Some (but not all!) of these folks were downright rude to authors trying to make their case for why they were angry at Amazon for delisting their books.

Now everyone is starting to weigh in on the war. John Makinson, CEO of Penguin, wrote an essay in the Wall Street Journal, that compared the ebook to the paperback, which Penguin pioneered by buying reprint rights from other publishers (WSJ links often only give you a snippet, so here is a post where GalleyCat summarizes the WSJ article). Makinson seems to be casting Amazon in the role of Penguin in this instance or not, but he's pointing out that Penguin abandoned the paperback-only model when other publishers began republishing books in paperback, thus killing their supply. Perhaps this is intended as a cautionary tale for Amazon? Makinson is also claiming publishers are enthusiastic about ebooks, which makes me skeptical. Okay, he calls their feeling "anxious enthusiasm" but I have seen more anxiety than enthusiasm, myself.

But one thing that everyone has noticed is, the reason this evolution has heated up into a shooting match is the entry of Apple into the eReader market with their introduction of the iPad, a kind of over-sized iTouch that plays movies, surfs the web, and includes an eReader app called iBooks. Apple is big news; their grasp of tech design and user interface is superior, and when they put out a new product, everyone notices. It was the deal that publishers cut with Apple to sell books on the iPad that emboldened Macmillan to lay down the glove with Amazon. The question is, was that a good idea? Some folks have pointed out parallels to Apple's entry into the music industry when the iPod came out, suggesting that in the long run, Apple might hurt publishers' revenue rather than help it.

Like all forms of progress, ebooks have pluses and minuses. They make it possible for public domain information or be freely available, as when the British library annoucned a plan to offer thousands of works of 19th century literature absolutely free. But ebooks also threaten the existence of bookstores. Some of this will be debated today at 2:00 pm EST in a live webcast on the "ebook wars", a confab hosted by editors and analysts.

To me the single most telling this about this situation is what I see on Twitter. My list is heavily weighted to spec fic authors, editors, and agents, so I saw a plethora of posts about the Macmillan/Amazon standoff, and yet, none of the parties involved or even the term ebooks ever appeared as a "Trending Topic" (Twitter's dynamic list of common terms). The iPad did appear, and it has stayed there for days. Our little shooting match is pretty much a tempest in a teapot as far as the larger world is concerned. What that says to me is that the iPad's success or failure won't be because of its abilities (or lack of them) as an eReader, at least not for books (I think it may have more impact on magazines and newspapers, actually). Books are, sadly, still not popular enough to register as a significant blip in pop culture, even when they're electronic.

The ebook wars might have become a revolution, but it's all happening in a small third-world country.





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Comments

( 3 comments — Leave a comment )
jongibbs
Feb. 10th, 2010 05:22 pm (UTC)
Another great post. Thanks for sharing, Karen :)
mtlawson
Feb. 10th, 2010 06:15 pm (UTC)
Karen, is that webcast going to have a replay available later? I've got a meeting at 2, so I can't have that running in the background while I work.
karen_w_newton
Feb. 10th, 2010 06:18 pm (UTC)
no clue but i would think so.
( 3 comments — Leave a comment )

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