The Ebook Market + Big Five Survival [Smart Set]

Smart Set

Welcome to the weekly The Smart Set, where I curate new smart reads about the publishing and media industry. I also point to issues and questions raised, and welcome you to respond or ask your own questions in the comments.

“To seek: to embrace the questions, be wary of answers.”

—Terry Tempest Williams

 

“To seek: to embrace the questions, be wary of answers.”

—Terry Tempest Williams


Has Everyone Conceded the U.S. E-Book Market to Amazon? by Jane Litte at Dear Author

Amazon Kindle, which already comprises 50-70% of the U.S. ebook by most estimates, may soon increase that share dramatically, due to lack of competition. Both Barnes & Noble’s Nook and Kobo have reduced their marketing resources and/or commitment to the U.S. market. As Litte explains, that leaves Google and Apple iBooks, the latter of which is only available to Mac/iOS users.

Questions raised:

  • If Amazon increases its dominance in the ebook market, as expected, will they ultimately reduce royalties to Amazon KDP authors, as they’ve done through their audiobook division? How much will profitability of authors be affected?
  • If Amazon gains more market share than they already have, how will this affect book discoverability and sales for the overall book industry , especially if they prioritize their own publishing imprints?
  • Can and will another worthy competitor arise in the next few years?

Everybody Wants a Netflix for Books by Joseph Esposito

E-book subscription services have been getting a lot of attention in recent months. You may have heard about some of the start-ups: Oyster is among the most high-profile and recent launches, while Scribd has been around a lot longer.

Publishing industry vet and consultant Joseph Esposito writes an insightful post that reminds us that the Netflix streaming service is not a true all-you-can-eat or comprehensive model. It does not offer some of the most popular shows (Game of Thrones, for instance), and there are huge gaps in its offerings, unlike its DVD service. Esposito has very firm conclusions, which I’ll let you read yourself.

Questions raised:

  • Most publishers/authors/agents do not see the benefit to having their books included in subscription services, thus the services aren’t truly comprehensive, which would help them attract subscribers. Under what conditions could these subscription services become attractive enough that successful authors/publishers/agents want to play?
  • How can these services survive in the long term, considering they currently have to bet on the “gym membership” model to remain profitable? (Users have to read fewer books if their monthly fee is to cover the royalties paid to publishers/authors.)

You can read more from the agent perspective on these services at the AAR blog, by Brian DeFiore.

What Penguin Random House Isn’t Doing by Philip Jones

The FutureBook blog (run by The Bookseller magazine, based in the UK) reports that Penguin-Random House UK is not doing many of the things advocated for publishers nowadays, such as selling direct to readers or rebranding itself. (PRH has more than 50 imprints in the UK.) But, he says, they also seem to be doing just fine without transforming their business. “This is a collection of businesses that was never broke, and not in need of a fix,” he writes.

Meanwhile, Mike Shatzkin, a U.S.-based publishing expert, emphasizes (and points to articles that show) that Penguin-Random House has made moves to become a consumer-focused publisher, trying to build a direct relationship with readers. He then discusses, big picture, the challenge of every publisher with dozens of imprints that hold little to no weight with the consumer:

Each major house should pick one name that is an umbrella. It goes on every book to establish the company as a major source of quality literature, enjoyable reading, and book-packaged information. Trying to target more precisely than that should be the job of the “imprint” brand under the umbrella brand. And that brand should be vertical, identifying subject or audience.

Basically, we’re talking about an enormous rebranding effort, with the potential dissolution of many imprint names, and a tighter, more explicit connection between imprint and target market. Think of Harlequin; you probably just pictured a romance novel. That’s the goal. Now, think Tarcher. Did an image come to mind? Probably not. (It’s one of the many imprints of Penguin in the U.S.)

Questions raised:

  • How much will the Big Five restructure to make their imprints more consumer-driven? And how quickly?
  • If the Big Five don’t get more “vertical” (focused and targeted) with their imprints, how big is the risk?
  • How essential is it for the Big Five (and all publishers) to sell direct to readers for long-term survival?

What questions would you add?

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Jane Friedman (@JaneFriedman) has more than 15 years of experience in the book and magazine publishing industry, with expertise in digital media and the future of authorship. She speaks around the world at events such as BookExpo America, Frankfurt Book Fair, and Digital Book World, and has keynoted writing conferences such as The Muse & The Marketplace. She currently teaches digital media and publishing at the University of Virginia. Find out more.
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18 Comments

  1. “Experts” keep saying that publishers need to brand themselves and sell direct, but I think this could only work for genre-specific houses (like Tor or Harlequin). I don’t know anyone who would want to see what Random House is publishing. They want to read whatever book is getting the most buzz and good reviews, and they usually go by author. I couldn’t tell you who John Green’s publisher is, but he (as an author) has built a rabid following. Seems like a very unrealistic prospect, especially for big houses with many imprints.

    • Amazon has branded itself and its product range is far more diverse. Publishers could do this too. Right now, no one cares about what RH is publishing, but that is because the publishers never developed themselves as consumer brands. If Fox, MGM, ABC and a host of other media companies can make a consumer brands, why not publishers? Just think of Time and National Geographic.

      • It’s possible, although it would obviously be easier for the smaller, more targeted companies. Honestly, I just don’t think the publishing industry (in general) is innovative enough to do it. I think even if they hired consultants, they’d hire the wrong ones.

  2. If Amazon becomes the only game in town in the US, I believe they will reduce author royalties and focus book discovery efforts (and algorithms) on their developing imprints. Remember, Amazon still needs to make money, profit, and there has been very little of that going on there.

    If the Big 5 start developing direct sales to reader models (admittedly a big undertaking from an infrastructure perspective), I see the development of services like Kayak or Expedia but for book discovery, not necessarily price shopping. Amazon doesn’t really do a good job of book discovery and there is room there for innovation.

    The question then becomes, where do bookstores fit in?

    • Maybe bookstores have no future? Just like video rental and camera stores, maybe local distribution centers are not needed–that is what a store is. Perhaps only specialty stores can survive?

      I don’t think book discovery is something anyone can do. There are simply too many books. The only way I see is the authors creating a readership. If the author can create a strong presence and a broad readership, then they will have better chance of being discovered–the bigger the target, the better chance to catch an arrow. I am not sure online retailers are not working on discovery–most stores like Amazon and iTunes select titles automatically for a customer as suggestions. iTunes also sends out e-mails. It would get too annoying if retailers are just bombarding us with titles.

  3. I hope the big houses aren’t smart enough to put themselves under one big umbrella name. Most readers don’t know their imprint names (some don’t even know the main house name), so smaller presses have a fair chance. Customers will pick up what looks good, but won’t choose based on which is a Big 5 imprint or a small house one.

  4. Publishers of ebooks need to start thinking globally. Americans are not the only group that reads, or even reads in English.

    Amazon will dominate. Its has shown it does not really care about suppliers. The trouble is that suppliers care about Amazon. The ACX royalty move has really cooled my interest in audiobooks. There is no real benefit to it. So, will authors and publishers stop using Amazon if there is not benefit to them? So far not. Amazon builds dependancy. Great strategy for them. There was a rumor the Apple was thinking of making an Android app for iTunes. Apple, until the DOJ lawsuit that was protecting the public from a monopoly, could put more balance into the market. Kobo has retreated overseas. B&N is sinking.

    Customers go to Amazon, if Amazon can supply what they are looking for. If Amazon does not have it, they will go somewhere else. Publishers like to complain about Amazon, but they have also given Amazon its power. If you don’t like Amazon, don’t do business with it. Publishers could simply join together and make a collective outlet. There is no magic to internet retailing and if people can’t find books on Amazon, they will go somewhere else. Publishers are just afraid. The threat of lost sales is too much. But being squeezed more and more is not a great solution, but apparently slowly raising the temperature in the cooking pot is easier to take.

    Right now ebooks have just been streamed long-form text. Amazon is big, but it does not have a lot of imagination. If there could be a really innovative ebook format (so far only Apple and Adobe have attempted it) that could give ebooks their own aesthetic from paper, just like movies are different from theater, that might be hard for Amazon to match. I think the potential of ebooks is really great, but it is going to take a lot of experimentation to figure out what the ebook medium is. Personally, I can see a great opportunity for artists working in the ebook form. Unfortunately, most artist don’t gravitate to digital forms. Even photographers are biased toward paper. And with a myriad of formats and very few flexible authoring tools, it will be a challenge.

    I doubt Amazon will dominate forever. We thought Sears, Macys, and Walmart could never fail, but they are. How and when is the hard question to answer.

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  6. The Big Five did brand themselves with agency pricing. I’d never seen so many readers so aware of a publisher and angry at them. Until Amazon removed tagging, you could see the impact of that in the tags. It’s improved some since the court settlement, but I can still tell a Big Five book w/o looking at publisher. Usually the digital book price is maybe ten percent of the print price. Sometimes it is the same. Sometimes it is more if they forget to change the digital price after the PB release. Once can feel their disconnect from readers w/o being an industry insider. And don’t get me started on the ones who think authors should help them build their publisher brand…

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  12. Kobo actually increased its user base to 18 million from 12 million in the past year, apparently with 15% of that growth coming in the US. With their new parent company, and the some of the social media companies in that group, Kobo is actually well positioned for the long haul. However, the relevance of the US market may not be that large or important compared to Amazon and the established publishing industry.

    Currently there is really not much technical difference from one online warehouse to the next – all mostly algorithm-driven – the saddest part of the current situation in my view. The biggest issue and opportunity is in helping readers discover good or great reading material. Ultimately that’s where one warehouse can outdo the other, but it won’t be done with computer programming, or rather that will be a minor tool and not the main driver.

    Just as traditional publishers may pride themselves a little too much in the gatekeeper mentality, online warehouses are foolish to put so much faith in automated recommendations…the logic is painfully flawed. When you think about it, the big 5 still carry a lot of weight in terms of “what’s good to read”.

    Meanwhile, independents are like the sperm trying to break through, once in awhile one succeeds. They’re mostly trying not to be too annoying in the process, especially to the point of, “Not tonight dear, I have a headache!”

    There. I’ve said it . . . indies need a sperm bank!

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