Answering the Call of the IBPA with Our Amazon Kindle Statistics

Earlier today a ripple went through the ebook Twittersphere as the Independent Book Publishers Association put out a call for information about ebooks: "If the e-books knowledge level matched the e-books noise level, publishers could proceed with confidence, devoting resources to e-books ­ or not ­ and managing the format to maximize profitability. The fact is, though, that very little is known." True.

If you are a publisher, I hope you will follow this link, answer whatever questions you can and get your information submitted by the August 3 deadline. And, please share any data you have in a comment on this post.

Not content to wait for the survey to be published, I am going to share my answers here (in interview form to entertain myself) in hopes that if I show you mine... well, you know.

At B&H we are putting a big push on our digital publishing initiatives. For the last 13 months we've published a handful of ebooks almost exclusively for Amazon Kindle but in fewer than 8 weeks we will have 70% of our active backlist and all new releases into full distribution to ebook retail, library, and academic channels. Given our aggressive posture, I've spent a fair amount of time analyzing Kindle sales data to build the business case for the work we are doing.

E-book/p-book ratios
IBPA: How many print-on-paper titles do you have?
PM: More than 700 active titles.

IBPA: How many e-book titles?
PM: 166 as of today. We will have more than 500 by end of September.

IBPA: What percentages of your annual revenue come from p-books vs. e-books?
PM: Less than 1%, but we are conservatively projecting 1000% growth next year.

Extent of experience
IBPA: How long have you been publishing e-books?
PM: 13 months

IBPA: What trends have you noticed?
PM: I have been tracking industry news stories about ebooks and digital publishing since last October when Oprah declared the Kindle her new favorite gadget. When I started there was one or two stories a week, now it is unusual to have a day without some piece of digital publishing news, and typically three or four stories--every day!

We are very encouraged by the growth patterns we've seen with Kindle sales but market conditions are changing so rapidly it is almost impossible to attribute trends. Excluding the anomaly of our NYT bestseller (The Love Dare), in one year of Kindle sales from June 08 to June 09, copies per title sales increased: 11% Q2 over Q1, 71% Q3 over Q2, 86% Q4 over Q3, and revenue per title increased 27% Q2 over Q1, 65% Q3 over Q2, 78% Q4 over Q3.

Market factors include selection and universe. The number of our titles for Kindle grew from 2 to 135, while Amazon released the Kindle 2, the Kindle iPhone app, and Kindle DX significantly increasing the number of devices in the market in the same 12 month period.

Relationships between formats

IBPA: Are your e-books versions of your p-books? If so, sometimes or always?
PM: Always, so far. We've also released some enhanced ebooks (marrying book and Bible content) and derivatives (checklist, quotes) as iPhone apps.

IBPA: Which version usually or always appears first?
PM: Print first or simultaneous, though we are looking at a couple of projects that may be digital first or digital only.

IBPA: What is the time period between versions? Or do you publish in both formats simultaneously?
PM: Currently we are doing simultaneous release of ebooks and print editions on new releases, though we are watching closely the current discussions related to pricing and timing.

IBPA: If your e-books are not versions of p-books, why did you decide to issue these titles only in electronic form?
PM: One product we are considering would be most used as a digital product, the other is going to be very expensive to print so we are considering digital to build the audience.

Pricing
IBPA: What are your e-book pricing policies?
PM: We match what is currently available in print.

IBPA: What are your e-book prices?
PM: $5.99 and up, matching print, though we are about to test $.99 essays and $4.99 sections from a nonfiction title on our Web site. The complete book is still the best value for $31.99 in print or digital, but some readers will only be interested in specific essays that are well worth $.99, but would not pay $32 for the complete book.

IBPA: What guidelines do you use in setting prices?
PM: Honoring our commitments to our retail partners, authors, and readers (not necessarily in that order), and watching the market like a hawk.

IBPA: Have you noticed price sensitivity?
PM: Can you still have a pulse and not notice? What drives me bananas is the misconception that ebook publishing is free, or even cheap. It is true (today) that print still pays the bills and digital is incremental revenue, but there is a lot of cost in developing, distributing, and retailing ebooks--everybody takes a piece. It will be very interesting to see how the supply chain changes when there's not enough to go around at $9.99. (More on the pricing debate here.)

Reaching readers
IBPA How are your e-books distributed?

PM: Through major e-book retailers, and we currently in negotiations with more retailers and distributors.

IBPA: Which reading devices do you publish for?
PM: Kindle, MobiPocket, iPhone, B&N eReader, Sony, Adobe Digital Editions, many others to come in the very near future.

Insights, lessons, tips and plans
IBPA: What have you learned from your e-book experiences so far?
PM: Pay attention.

IBPA: What e-book plans do you have for the future?
PM: Enhancing the reader experience with the content and connectivity. We are counting on the device manufacturers to enhance the reading experience, and the retailers to enhance the shopping and purchasing experience, but we've got to deliver the content.

Would You Participate in a Virtual Trade Show?

This is the first summer in nearly fifteen years I have not attended one summer book show. No BEA, no ALA, no PLA, no ICRS, no RWA, nothing. I really missed getting out of town, seeing friends, and the energy and ideas I usually pick up from a crowded exhibit hall and days filled with 20 minute meetings, but am I any further behind with my business or relationships because I missed the shows? I don't think so. In fact, thanks to Twitter and my favorite industry enewsletters and blogs, I probably know more about what happened at each of those shows than if I attended. I am certainly more connected and aware of what is happening in our industry than ever before. Which got me thinking...

Why doesn't one of industry associations (or heck, why not Ingram or Baker & Taylor or Levy) host a virtual trade show next year? Plan a full schedule of online seminars for retailers and publishers. Allow publishers to host online author events. Set up a virtual exhibit floor where publishers pay for size of their "booth" by the number of titles they feature and location. (If you think location doesn't matter online, explain to me how that stupid Evolution of Dance video remains the most viewed YouTube video of all time). Put a reception desk in each booth where industry people can schedule meetings, drop off business cards, and pick up digital schwag. Provide "meeting space" in each booth for live chats. (In many ways, publisher Web sites should act the same way I suggest for virtual exhibit booths.)

To be really effective, everything would have to be concentrated over two or three days, including a couple marquise events to generate awareness and buzz for getting people to participate within a specific window of time. Yet, one great benefit for exhibitors and attendees (association members) is that the exhibit environment could be accessed or updated any time. As with trade shows now, the bigger or more creative, proactive, and interactive a publisher gets with their exhibit space and products, the more attention they will draw.

I just Googled virtual trade show and a lot of people much smarter and more foward-thinking than me have been doing this for a long time, but who is doing it effectively in the book industry?

If you are a retailer, do you go online to get information about upcoming releases? Where do you go? Where do you go for advice about your business or industry news?

If you are a publisher, would you participate in an online trade show? What creative online events, products, or schwag do you offer now or would want to offer at a virtual trade show?

Would it change how you use your Web site?

Opportunities for Publishers in the eBook Discussion

The following post comes to us courtesy of Douglas Johnson, owner of Live Model Books, a company that produces reference material for figurative artists. It originally appeared as part of an ongoing LinkedIn discussion. If you are on LinkedIn and interested in this topic, I strongly suggest you join the group: Ebooks, Ebook Readers, Digital Books and Digital Content Publishing and get in on the discussion. Things are really heating up now with Barnes & Noble's new eBook push.

E-book price resistance comes from people outside the publishing industry—which, of course, is 99.99% of our customers—who don't understand that there are costs in developing books, marketing them, and maintaining a business to support them. They think e-books somehow cost nothing to publish. I've repeatedly seen people write "Publishers are greedy, there is no cost in publishing an e-book and yet publishers want to charge full price." At the same time, they frequently argue that the book should be available in their preferred format; e.g. "I spent $250 for a Kindle, I darn well want all books to be available for it as soon as they are published." In other words, customers want us to make it convenient for them while also making it cheap. Our response should be "we'll give you the format you want, but it has to be at a reasonably high price."

There are several opportunities here for publishers.

1) People have made an investment in their reading device and they need content to make that investment worthwhile. Therefore, there is a demand for e-books and we as publishers control the supply. That suggests we should set reasonably high prices for e-books, before the $9.99 expectation sets in permanently (if it hasn't already). In my own business, we've been selling e-books from our websites for years at $19.95, the softcover version is $24.95, and rarely get a complaint about price.

2) Publishers do not get any of the $250 or more initially paid for the e-reader and yet customers are factoring that in to what they are willing to pay for the books. As a result, they demand a lower price. The result is, publishers are subsidizing Amazon.com and other e-reader retailers by accepting the idea that we need to price our books lower. Furthermore, we're making it possible for them to develop and grow new businesses while we are forced to radically adapt ours and to accept a lower cover price. That's one reason Amazon.com is pushing hard for a $9.99 price point. At the same time, we are lowering their warehouse and handling costs.

Why should all of the cost savings go to the retailer? Yes, publishers have no print costs for the e-book, but that's a huge oversimplification. We still need to do large print runs to supply the print books. If those runs get smaller, the cost per book goes up. If we print the same amount and sales go down, then we have more waste and again the cost per book goes up. And, there is all the development costs of getting the book prepared plus all of the fixed costs associated with running a business.

Retailers of e-readers are making more money while publishers continually make less. I think we should strenuously resist the $9.99 or less price point by setting much higher suggested retail prices (in non-fiction, at least). After all, without us supplying e-books, where would the e-reader device be? In an ideal world, higher e-book list prices would force e-reader retailers to lower the price for their devices. If e-readers were nearly free, publishers could maintain higher prices for their books. The retailers would make more money on each book sold but more money would also go to the authors, who spend years developing the books. That would be fair. Another option would be a much, much lower discount so that publishers keep, say, 80% of list price. What discount does Amazon.com get for e-books?

Perhaps some publishers should develop a Kindle-like device that they give away at or below cost. If that sounds far-fetched, consider Audible.com which now dominates online audio books. Early on, a low cost subscription to their site included a refund for a listening device. Once people had the free device, they were willing to pay relatively high prices for the content. That's a much closer model for us than the usual comparison to the movie and music industries. And, it is a model in which publishers can thrive!

3) Customers seem to think all of the cost of a book is in the printing and shipping. Unfortunately, I rarely, if ever, see a publisher step in to one of these "publishers are greedy" discussions and explain that finding and developing authors and books is expensive. Publishers should all make a point of explaining the true cost of publishing every time we can. Perhaps we can chip away at the perception of e-books costing nothing to develop.

4) There is greater value in e-books than print books in some respects. One device can hold hundreds or even thousands of books, which makes the books incredibly portable for reading anytime and anywhere. An e-book will never wear out, it will never get lost (if the reading device is lost, it can be replaced and all the books downloaded again). An e-book is available instantly anywhere in the world that has an internet connection. That's an incredible advantage. There's no shipping cost to the customer for an e-book. Unlike print books, a customer can buy one book now and another one ten minutes later, without worrying about aggregating their order to save on shipping.

As publishers, we should be talking about these benefits, and the reality of who is really making money on e-books, every chance we get.

Dominique Raccah responds to WSJ piece

Dominique Raccah, Publisher and CEO of Sourcebooks, wrote the following post in response to last week's Wall Street Journal piece. This post originally appeared at BookSquare, and is being published here with Dominique's permission.

What are words worth, I wonder?
by Dominique Raccah, Publisher and CEO of Sourcebooks

Given responses to the Wall Street Journal article on Monday, I thought it might be useful to explain some of the thinking that went into the decision to delay the ebook release of our very hot upcoming children’s book, Bran Hambric.

And that includes this background: We need a sustainable author/publisher model, and it’s probably not the model of old. But the new music model of low-priced content and sales of concerts and ancillaries is probably not a viable model for book publishing. Authors, unlike musicians, don’t typically have paid live performances (and t-shirt sales are usually few). They have words. And we need to have a real conversation about what those words are worth (and that’s what the pricing issue is actually about) and how do we keep them worth enough to support authors, authorship and publishers. And yes, we can (and I suspect will) have a conversation about whether that last piece is worth supporting and at what level.

But here’s the thinking:

• I agree wholeheartedly that digital formats should be readily available, immediately (you can see from other decisions we’ve made how important digital is to us).
  
• We are being told (repeatedly) that ebooks are inherently less valuable—they are not physical; they are not easily ported; they can disappear at any time; etc. The value issues of ebooks are not issues that can be solved by a single publisher.
  
• Eretailers are suggesting that the “right” price point for an ebook is maximally $9.99. And they are proselytizing the price $9.99.
  
• We can’t control what retailers charge for books or ebooks. The choices book publishers have are:
  - To make the product available, and when
  - To have a relationship with that retailer
  So that’s the fundamental decision we get to make. It’s not, what’s the right price for this author…or for a book that he’s worked 10 years on (yes, Michael Malone’s new hardcover The Four Corners of the Sky is also not available as an ebook)…it’s just do we make it available and when?
  
• Formats have windows. We know when we (book publishers) put out different formats in the lifecycle of a book. So we shouldn’t be releasing ebooks at the same time that we release a hardcover book. We should be releasing ebooks when we release the trade paper or mass market of the hardcover and can then price appropriately to that. To me the decision is analogous to a new release in movie theatres; we don’t expect that movie to be immediately available on DVD.
  
• There are some who say, digital and print don’t cannibalize and you’re going to miss sales. But isn’t this the same as people (myself included) who say I’ll wait until it comes out in paperback or I’ll wait to see the DVD? And don’t those people sometimes forget and not buy or rent? So yes, there’s a risk that sales will be missed, but isn’t that a risk that has always existed in format choices?
  
• If you continue with the lifecycle concept, the vast majority of the books we (Sourcebooks) publish will release in e-formats at the same time as p-formats because we are primarily a trade and mass paperback publisher. And in fact our xml workflow structures towards simultaneous release in multiple ebook/ereader formats.

I would also argue that music is absolutely not the right model to compare books and book publishing to. And newspapers are even less appropriate. However, that’s a really long conversation, and I’m a publisher not a pundit. We should make the choices that are right for our authors and their readers.

We are at the beginning of model building. If hot frontlist titles are to be available in e-formats, they need to be priced by the publisher, at a reasonable discount from the hardcover retail price (to take into account the devaluation of eformats). I am totally open to that. But that’s not an option currently available. I think people may be willing to pay the premium to have the new new thing, or they may want to wait until the price falls with the trade paper edition, at which point the e-book price should be adjusted and $9.99 may make perfect sense.

I agree with Kassia that it’s dangerous to expect consumers to play by the rules of last year’s business model. I’ve taken action in this one situation and I certainly wonder if there are other options that are neither mine nor the $9.99 option. And I also agree that we need to experiment, and I see our industry beginning to do that. But this pricing and release-date situation doesn’t feel like an experiment. This actually seems more like a dictate that could have enormous ramifications, perhaps not today, perhaps not tomorrow, but certainly long-term on the future of authors and books. And I think all I’m saying is, let’s think about this. It’s too important. As a publisher, we have to be strategic, book by book (and it’s important to remember that we’re talking about 1 book; Sourcebooks has 850 ebooks available). These are big decisions for our authors and ourselves. So in situations where the e-format release could hurt the author’s launch, what if we were to wait?

The New York Times enters the ebook strategy discussion

Dominique Raccah took a very brave and unpopular stand to launch a very necessary and important conversation for the publishing industry. It is interesting that none of the "big guys" seem willing to take a stand, and a shame that the WSJ and NYT zeroed in on the "cannibalization" issue instead of the pricing issue. The real story here is what Amazon has done to establish customer expectations and cement their dominant market share position, not to mention how publishers have just played along. Until now.

Amazon pays publishers a percent of the digital LIST price for ebook sales, often sale pricing books at a loss. Amazon even encouraged publishers to set their digital list prices to match highest available print edition to help reinforce the value position for the consumer getting a $25 book for just $9.99, for example. Publishers gladly went along, realizing greater revenue as a percent of the higher list price. Amazon also cornered the pricing game by insisting that publishers’ digital list prices be the same across all channels. Sony, for example, sells most ebooks at 10% off the digital list price. So, an ebook with a $25 digital list price might be on sale for $9.99 at Amazon and $22.50 at Sony, and generally $25 (no sale pricing) at ebooks.com, booksonboard.com, deiselebooks.com, etc. If the publisher lowers the digital list price so the other retailers can be more competitive, Amazon reserves the right to match the lowest digital list price in the market. Publishers don’t dare lower digital list prices on the risk of losing revenue with the one retailer who is selling the most books.

Amazon’s willingness to take a loss on ebook sales these first few years has established a consumer expectation to buy ebooks for $9.99 or less and cemented their dominant market share position. Now Barnes & Noble says it will follow a similar pricing strategy but they won’t be paying publishers according to the digital list price, and so starts the slippery slope. $9.99 is not a sustainable price for retailers or publishers but the customer expectation is already established. And, as a consumer, I get it. I'm not paying more than $9.99 for an ebook. I've wanted to buy What Would Google Do? for at least three months and it still hasn't gone on sale for less than $14.99, so I wait.

Raccah is the first of the publisher sheep marching toward the ebook slaughterhouse to stand up and suggest that we don’t have to keep going the direction we’re heading. In fact, to survive we have to establish a different value paradigm. Her suggestion to preserve the value of content is to put it on a time line the same way books are released in hardcover before paperback—the content is available to everyone but only in a certain format for a certain price at a certain time. In other words, if you want it in paperback you wait. If you want it in ebook, you wait.

Dominique Raccah is smart enough to know the market will determine the value of an ebook and recognizes that asking someone to pay $25 for something they only value at $10 won’t work. So the next most valued currency is time. You can have it for $10 but you have to wait. Will it hold up? I don’t think so, but I don’t have a better idea. And the value of this public discussion in the WSJ, NYT, and countless industry blogs instead of blindly following the sheep in front of us is priceless.

Read more here:
Wall Street Journal
New York Times
Galley Cat
The Business Insider

Thoughts on eBook Pricing, Release Strategies, and FuturePublishing

The Wall Street Journal reported yesterday that leading independent publisher (and my former employer), Sourcebooks, is pushing back against the devaluation of ebooks typically sold on Amazon and B&N for $9.99 by delaying the ebook release of one of its major Fall books for at least six months after the hardcover release. The plan, as I understand it, is a kind of staged release, similar to that of a book going from hardcover to trade paperback to mass market paperback, inserting the ebook release somewhere in between.

"It doesn't make sense for a new book to be valued at $9.99," said Dominique Raccah, CEO of Sourcebooks, which issues 250 to 300 new titles annually. "The argument is that the cheaper the book is, the more people will buy it. But hardcover books have an audience, and we shouldn't cannibalize it."

Dominique is a smart publisher, a great advocate and defender of authors and readers, and she has just ripped the lid off this can of worms. Check out the comments on the WSJ article and you will see that people generally don't have a high regard for publishers who are being demonized like the greedy music industry for destroying the old model. I would contend, though, that there is no bad guy in this story. Publishing is just changing.

Aside: The biggest misconception about ebooks is that there is no or little cost to sell them. It's simply not true. Think about development. Think about distribution and everyone who touches a file in the process and their piece of action. Think about storage fees and transaction fees. As soon as I hear or read a comment that ebooks are free or even cheap to produce and sell, I immediately tune it out because it is clearly an uneducated comment.

Releasing a book in stages may be as a good an approach as any today, especially for high profile books. As one comment on the WSJ article said, "The blockbusters will make a fortune, while the also-rans will be read by friends and family. Hmmm...sounds a tad like the film and music industries, doesn't it?"

It is an interesting and exciting time in publishing. There is a lot of criticism and comparison to the failure of the music industry, but I don't think the music industry failed. The music business just changed. I guess if I had been employed by a record label I might think differently, but the independence fostered by technology we see today is a cleaner business model for artists (and authors) to develop their material and their audience, and market and sell their own products.

In my vision of the future, surviving publishers will become like successful music producers adding value to the content by truly making a better reading experience than the average author can do on their own, and doing it consistently. No longer can we publishers survive on packaging, blowing in air to bulk out a spine width for shelf presence, and adding seven or eight chapters around one or two central ideas. Content must deliver and do so in the way the reader wants, which is going to be very different from most books today, especially for nonfiction.

Reading on devices will be Web-based. Kindles and other e-readers will be replaced with color touch-screen tablets with full Internet access, always-on high speed wireless connectivity, and will be marketed by the wireless service providers. Ebooks will auto sync between a user's mobile phone, tablet, laptop, desktop/TV, but reading will be just one of many info/entertainment features along with video phone, gaming, TV, movies, and more.

Online retailers will become like broadcasters, posting most content for free on ad-supported platforms merging author-generated content with user-generated content, sharing ad revenue by page view with authors and publishers, and offering pay-per-view options for special events, and print-on-demand paperback editions.

Brick and mortar stores will sell mostly used books, as well as collectible first run publisher paperbacks. Only select titles will ever be released in high-priced hardcover editions tricked out with bonus content and the very best in design and print production quality. Think CD box set.

That is not so much a futurist vision as it is already happening in degrees today. While the market is determining the value of ebooks (I for one won't pay more than $10 for an ebook, and now that I own a Kindle don't intend to purchase any more print books), we will see a lot of experimentation and discovery with pricing strategies and release strategies.

Delaying an ebook release will certainly produce some backlash from the early adopters who spent $400+ on a device and cannot get the book for their device when it releases, and for that reason, I don't think this approach will stick. It could work though, if the consumer could get an "advanced copy" of the ebook with the purchase of the hardcover. It feeds the early adopter's need to have something before everyone else, and the author, retailer, and publisher still get the hardcover sale. Even a $25 hardcover might be on sale for $15, which is $5 more than the ebook will be in six months, but the consumer gets the ebook now, before everyone else, and a print edition they can resell or gift, providing a kind of pass-along/word-of-mouth marketing benefit to the publisher. Barnes & Noble and Amazon could launch a program with the Public Library Association and give consumers the option to donate the print edition to a struggling public library.

The Love Dare exceeds 3 million in print, launches iPhone apps

New iPhone Apps based on best-selling book climb the iTunes charts

NASHVILLE, TN (July 7, 2009) – Check today’s most popular books in the iTunes App Store and, amidst teen favorites like Twilight and Transformers, you’ll find a surprising pick. The Love Dare: 40 Dares, an App based on the New York Times #1 best selling book The Love Dare, has climbed steadily on iTunes charts since its release earlier this month.

But then, The Love Dare has shattered expectations in every medium it has touched.

The movie Fireproof surprised Hollywood by becoming the top-grossing independent film of 2008. It tells the story of a firefighter struggling to save his crumbling marriage who is given a book called The Love Dare. The book offers "dares" that become pivotal in rebuilding his marriage. Touched by the story of transformation, Fireproof’s early audiences asked where they could find this life-changing book.

The Love Dare, a book that presents the same 40-day challenge for husbands and wives who want to strengthen their marriage, was released by B&H Publishing Group to coincide with Fireproof’s national theater premiere. The book became a best seller on the New York Times advice list, and has spent 39 weeks to date in the list’s top ten with more than 3 million copies in print.

Now, the same message is brought to an even wider audience with the release of three Love Dare-based "Apps" (software applications) on Apple’s online store, iTunes, that markets specifically to iPhone users. Powered by BibleReader, a mobile Bible study program created by Olive Tree Bible Software, these Apps aim to transfer the complete Love Dare experience to the iPhone for mobile users.

This digital release broadens the unconventional outreach strategy that has brought the faith-based message of The Love Dare to a wide audience using channels, like movie theaters, music stores, online communities, and electronic distribution, that have traditionally been dominated by secular media.

There are three Love Dare Apps available on iTunes. "The Love Dare: eBook + HCSB BibleReader" presents the full text of The Love Dare book, along with live links for each scripture reference and complete access to the full Holman Christian Standard Bible translation. "The Love Dare: 40 Dares" features each of the book’s 40 dares with scripture reference pop-ups, and a place to check off completed dares, along with the complete text of the King James Version Bible. "The Love Dare: Reminders" includes 365 inspiring quotations from the book that users can mark as favorites and email to friends, adding personal notes.

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