Book Publishers Becoming Irrelevant?

Ouch.

A great post on GigaOm from the London Book Fair, where a panel was held to debate the question of "Authors and readers are all that matter. Publishers will become irrelevant." As you might expect from the venue, the audience voted for the publishers to continue to be relevant. I think publishers will have some relevance, but not the same sort they hold today.

Publishers have to find new ways to add value, or to justify the percentage they take from authors. Or perhaps alter the percentages. Authors are now free to publish their own works, and some are making a damn good living at it (Joe Konrath looks to bring in well north of $500,000 this year... I'd call that pretty damn good). Yes, that means authors have to deal with finding someone to edit their books, format them, create a cover, write blurb copy, upload the book to all the different services, create and execute a marketing plan, and spend a lot of time marketing their books and keeping track of all the details of accounting and the various fiddly things to deal with the online book publishers like Amazon and Lulu and Smashwords and others.

Some authors are capable of dealing with some or all of that easily. Some don't want to deal with any of it. Services exist to provide all of those things for a flat rate, so authors can line up any of those things they don't want to deal with directly. (Which still means selecting a vendor and managing them, which some authors don't seem comfortable with doing.) When an author can do it all themselves, and reap a 70% royalty instead of about 10%, publishers now have to show why their much lower royalty rates are in fact a good deal for the authors.

I don't think any publishers will really be able to do that. Publishers will have to boost their royalty rates (on e-books at least) and change many of the annoying things about their business (like taking 18 months from getting a manuscript to release of a book) in order to get authors to sign with them.

Really, what ebooks and digital distribution have done is expose all the weaknesses of the old publishing model. The whole concept that more than half of all the books printed end up getting returned and pulped shows massive inefficiency. Which leaves room for a much more efficient model to transform the industry, which is occurring right now.

E-readers will only get cheaper, better, and more prevalent. As tablet computing spreads with amazing speed (1 billion tablets by 2014), ebooks will become the main source of book revenue. Specialty books, such as fine editions of novels or art books for the coffee table, will continue on. But mass-market paperbacks will never again hold the prevalence they have in the past.

Will there be a lot of crap? Oh, yeah. But the good stuff will find an audience. Marketing will be important, but I think it's more about getting your good work known more quickly than it would without marketing. If you write a really great novel, people will find it and talk about it and it'll get known eventually. Marketing won't magically transform hackwork into brilliance; what good marketing will do is help your work reach its market potential more swiftly.

Choose Your Own Adventure Books Find New Life

My interactive novel... I still have a dozen copies.

A very nice article recounting the history of the Choose Your Own Adventure books can be found here. I was not aware of the story behind these books; I was much more aware of interactive fiction in the game industry. TSR had a number of them, the Lone Wolf series was a classic, and of course the solo adventures from Flying Buffalo were a wonderful example of how to do it right. I even wrote an interactive novel (choosing a path, yes, but with dice rolls) for Iron Crown Enterprises, Treason at Helm's Deep (yes, it was set in Middle Earth).

The interesting part is that both of the creators of CYA books (who are no longer on speaking terms) are both trying to bring these back to life, one as Apps and the other actually reprinting the books.

Seems to me that ebooks are a perfect venue for CYA books, especially if you can jump right to the page you want. No flipping required! It's another interesting possibility for the classic pen-and-paper RPG to explore, and one that shouldn't cost a lot to develop. Interactive ebooks could be a useful marketing tool to spread the word about your RPG setting, and one that makes money in its own right. Marketing that makes money directly is my favorite kind of marketing...

Digital Distribution: Will Games Face The Music?

Will games follow a similar path?

The chart above, reproduced from Silicon Alley Insider, shows the progression of the music industry through time with different formats, and how digital distribution has taken over. But the sales overall have dropped, which may be a reflection of how piracy affected sales, or perhaps it just says something about the quality of popular music in recent years. Perhaps it reflects the difference between being forced to buy an entire album to get one or two tracks you like, and the ability to just buy those tracks.

Digital distribution of products is in the process of transforming the book publishing industry, as ebook sales continue their meteoric rise and authors discover they may not really need a publisher after all. Digital distribution now accounts for about 25% of EA's revenue, and it's growing rapidly.

The missing factor is just how much this may change game development in the future. THQ has already said they will try releasing a new title for a lower price, seeking to make up the lost profit by selling DLC. I expect this model to catch on for several reasons; it can lower the cost and time for developing titles, and lower the risk, too.

The trend is clear for all sorts of media: Digital distribution is the future. Companies that fail to make the shift fast enough risk being left behind.

Google's eBookstore

Google has launched its eBookstore to take advantage of the millions of books it has scanned. And grab some of the revenue that Amazon and others have been raking in as ebook sales finally begin to take off. The eBookstore has some interesting features, of which the most useful is that they intend to help independent bookstores. How? By cutting them in on a slice of the pie... Google's standard terms are 70% for the publisher and 30% for Google. If you're an independent bookseller, you can put the book up on your web site and Google will give you a slice of that 30%. How much? That hasn't been disclosed, because the deals vary from bookseller to bookseller.

An independent bookstore that's cut a deal with Google can put ebooks from Google on its web site, and at least make some of the revenue. Right now there's really no way for a bookstore to get any slice of what Amazon or iBookstore is selling. Google clearly wants to try and enlist some help from retailers who are otherwise left with a shrinking number of physical book sales while Apple and Amazon rake in the money from the fast-growing ebook market.

I'm not sure if more independent booksellers will glom onto this opportunity, or if it will really help them out. But it certainly can't hurt, and it's a glimmer of hope in a dark time for bookstores. I think bookstores will have to push harder on the social aspects of their business; a gathering place for book lovers, coffee drinkers, authors and enthusiasts to meet and share their love for knowledge.

Google's eBooks effort still has issues to deal with, though. Their free Google Books app is not as polished as similar apps, and clearly needs work. Also, their basic concept is that you don't download the book, but keep your copy in the cloud. Which means you can access it anywhere on any compatible device, and take up reading from where you left off, and not worry about losing your file. On the downside, you need an active Internet connection, which is a real negative compared to a Kindle or other ebook reader. (Google does have a way for you to download the book files, though.)

Google is allowing individual authors to put their books in the eBookstore, so this is yet another venue for authors to hock their ebooks (read more details here). It remains to be seen just how strong a sales venue this will be. Clearly the key selling point is that your book in the eBookstore will appear in relevant searches; the theory being that this will result in a lot more sales since people will be finding your book more easily (though this seems to make sense only for non-fiction books; I doubt fiction titles will be found through searches).

One more thing about this is the whole protracted court case over the Google Books concept. There's a settlement that the court has approved preliminarily, and this will allow Google to continue scanning books. There's still more than a few people unhappy with this idea (that books can get scanned in without their prior consent), but it looks like it will be the new reality. Marketers, start your search engines...

App Bonanza Expands

As I write this, Steve Jobs is busy telling developers about the new iPhone, and it does sound pretty cool. But the real news that should be getting you excited is not the new hardware, nor even the advent of Farmville for the iPhone. It's the state of the App market. Now there's 225,000 Apps in the App store, and they just crossed 5 billion downloads... and have paid out over $1 billion to developers. Plus, while Apple was showing stats on the growth of the iPhone and its App market, they were showing numbers about Android. They interesting thing is how Windows Mobile, Blackberry and Nokia are shrinking, while Apple and Android are growing at an amazing rate. Why does this matter? Because Apple and Android have easy App markets to get into, and by far the highest volume of App sales... so that's where the money is for developers.

New Android phones are getting pretty amazing, and it's nice to see sharp competition between Apple and other hardware makers. The result is the market for Apps of all flavors is growing fast. Interestingly, there is only a 5% overlap between iPhone Apps and Android Apps, according to Flurry (the leading mobile analytics firm). This surprises me... app developers are missing an easy way to expand their sales. Do an iPhone app, then port it to Android, or vice versa.

And all this App frenzy is even without counting the 2 million iPads sold so far (one every 3 seconds now), and the 17 apps per iPad that have been downloaded to this point. Oh, and PDFs are now part of the iBookstore... and the iBookstore is accounting for 22% of ebook sales from major publishers. Plus they are now allowing individuals to put ebooks up for sale. And the iBookstore (complete with PDF support) is coming to the new iPhone OS 4. So individual authors can now make their ebooks available to the 100 million iDevices out there, or will be able to soon.

Rumors have already started to emerge that Apple TV is going to get completely redone... as an iPhone type device, using that operating system and ecosystem. Imagine being able to buy games and play them on your TV... as Apple finally cracks the console market and completely upends that business, while opening up chances for small game developers to finally reach a huge audience. And did I mention Google TV, which has already been announced and is planning essentially the same thing? I wouldn't want to be Sony or Nintendo or Microsoft right now. They're going to be in LA in a week trying to get the world excited about what's coming for consoles, and meanwhile the world is changing in fundamental ways that they don't address.

Marketing is going to be even more key to this future...

Ebooks and Piracy

This thriller author thinks that piracy is an inescapable fact of life, and that it can be used to a writer's advantage. I happen to agree with him, in general. He has some specific data to back up his assertions, based on his own sales figures. (Caveat: of course he's not providing complete information, nor are his data audited, so he could be making this up to a greater or lesser degree. But let's assume he's telling it straight.)

I think the missing part of the whole equation is marketing. Once you have established yourself as a brand, a recognizable name that has qualities a consumer is interested in, then it's a lot easier to get people to pay for your ebooks. This is usually achieved by selling books in stores; getting noticed in the vast wastelands of the Internet when you have no name or reputation is much more difficult. Any author attempting to make money solely on ebooks, from a standing start, had better have a good marketing plan for building a paying audience.

Look, I was one of the very first publishers to sell ebooks. In fact, I'm pretty sure I was the first to put ebooks into retail stores (they were on floppy disks in ziplock bags, if you must know). Ah, the good old days of Acrobat 1.0... well, it did work, sort of. Anyway, ebooks can sell despite piracy. But you have to deal with the existence of piracy primarily through marketing, not technological fixes.

DRM and Ebooks: The Statistical Bikini

Cory Doctorow posted an interesting note on his blog. Basically, he noted that O'Reilly had dropped Digital Rights Management (DRM) on its ebooks, and since they did their e-book sales had risen 104%. The most interesting part to me was reading through the comments... in which they proceeded to eviscerate the note for a number of logical errors.

First, and foremost, as several commenters pointed out, correlation does NOT imply causation. Just because two events happened in the same time frame, even in the same location, that does not mean that one caused the other. Additional evidence of a link must be provided to draw that inference. Data which was completely lacking in this post.

Second, other commenters noted that the absolute numbers were not provided. One commenter noted that his books sold through O'Reilly had only sold 1 e-book last year, so if they manage to sell 3 next year it would be a 300% increase... but not really impressive when you're staring at your royalty check.

Finally, others made the important point that sales of ebook readers had taken off like a rocket in the past year, so one would expect sales of ebooks to rise. A more logical investigation would be showing the number of new ebook readers sold, the installed base, and comparing those figures to the rise in ebook sales for O'Reilly. One might even find that O'Reilly's sales of e-books dropped relative to the increase in the total market size, or to an O'Reilly competitor. Which would put the whole blog post completely backwards from reality.

However you feel about DRM and its utility or value, you'd do well to use rigorous logic and statistics to make your arguments. Cheerleading with isolated facts does not advance your argument; it hurts it.

Always remember that statistics are like a bikini; what they reveal is interesting, but what they conceal is vital.