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Michael Tamblyn's TOC Frankfurt presentation (actually a dramatic recreation thereof)

Shortcovers’ Michael Tamblyn was kind enough to record his talk and slides from last month’s TOC Frankfurt Conference. I got a lot of great hallway feedback about the session, and you’ll see it’s for good reason. Michael will also be speaking at TOC New York.

Posted via web from TOC Posterous

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  • bowerbird

    oh boy, this is some juicy stuff.

    i will have a very good time separating the wheat
    from the chaff from the disinformation in this talk.

    but let’s cut right to the chase, ok?

    here’s what tamblyn says around the 24:00 mark:
    > and yes, if the books have d.r.m. on them, it means
    > that we have to trust adobe to maintain — ahem —
    > the d.r.m. standard that they wrap around the .epubs
    > that we’re using, but it seems like the best compromise
    > for the time being, while publishers get their heads
    > around d.r.m., and my hope is that they will do
    > the right thing, you know, like they’ve done with .pdf,
    > and make the maintainence of that d.r.m. something
    > that is either run by industry, or is a little more open,
    > if, in fact, d.r.m. is something that industry continues to
    > demand, or until cory doctorow triumphs, in which case,
    > you know, we could see a whole different thing.

    right up before this point, tamblyn remarks on how
    empowered the customers will be, since they can
    download the books to their own machine and thus
    immunize themselves from losing e-books they buy,
    by being able to shift them to any machine they want.

    but of course, this doesn’t really apply if d.r.m. was applied…

    and tamblyn knows that most publishers these days do indeed
    apply d.r.m., so he’s been intentionally duplicitous right here…

    and his description of the adobe d.r.m. scheme as a “standard” is
    a _particularly_ insulting word-choice coming from someone who
    purports to be a supporter of “standards”, especially “open” ones.

    so, with d.r.m. books, customers will need to “trust” adobe…

    but anyone who has been paying attention to history knows
    for a fact that adobe can be trusted to _gouge_ its customers;
    and that is the extent of the “trust” one can place in adobe…

    second, it’s just misleading to say that adobe has turned .pdf
    into an “open” standard. there is one variant of .pdf that _is_
    an open standard, but adobe still controls the main thrust…

    and, as far as its d.r.m. scheme goes, it’s highly unlikely that
    adobe will turn that over to “industry” (whatever that means)
    _or_ to make it “open” in any way. their d.r.m. scheme is the
    mechanism that lets adobe insert itself as the middleman and
    extract a toll, which is exactly what adobe _wants_ to do here.
    (and you can bet, adobe being what it is, the toll will be high,
    which is why it’s amazing publishers are helping adobe do it.)

    moreover, their use of that adobe d.r.m. scheme means that
    reader-devices have to license the a.d.e. decryption-program,
    which gives adobe another stranglehold on the infrastructure.

    and my goodness, isn’t adobe particularly inept nowadays?
    between flash and the .pdf browser-plugin, i figure adobe
    is responsible for about 90% of computer inefficiency today,
    with the unnecessary hangs and outright crashes it causes.

    i chuckle when i think what a flustercluck the e-book scene
    will degenerate into, when one reader-device after another
    succumbs to adobe bugs, with d.r.m. hassles sure to arise.

    to “trust” adobe is — in my opinion — the _worst_ possible
    course of action that the e-book world can take at this time.

    to say “it seems like the best compromise for the time being”
    is to be terribly shortsighted. the future will laugh at that…

    -bowerbird

  • bowerbird

    ok, let’s get on to the next little tidbit of juicy here…

    at 14:44, tamblyn displays an extremely interesting graph,
    which shows the number of sales at various pricepoints…
    (these are the sales for tamblyn’s company, shortcovers,
    which sells e-books to many platforms, but not the kindle.)

    i’ve reposted the graph here, so you can take a look at it:
    > http://z-m-l.com/misc/$10-cutoff.png

    the chart shows a lopsided “normal” distribution, centered
    at $10, with a definite skew of cases heavy to the left of that,
    representing much higher numbers sold at lower prices, and
    much fewer sales in the $11-$16 range, nothing above that.

    tamblyn says this:
    > when you look at the distribution of our canadian sales,
    > in a market where we don’t compete against the kindle
    > at all, they still look something like this. and that spike
    > that you see at the top is the $10 spike, the $9.99 spike.
    > and it isn’t like we don’t have lots of books at $11, and $15,
    > and $21. publishers give us all kinds of books above $20, but
    > readers stop at $10. and you can see a few of them hold out
    > to $11 or $12 or even $16, but most of them stop at $10.

    if you haven’t been paying much attention, like most of the
    big corporate publishers haven’t been paying much attention,
    this chart is startling.

    do you know how those big corporate publishers have been
    whining about amazon’s $9.99 pricing? they’ve taken it on
    as their main talking point, how amazon is ruining the value
    of their product, and is going to force them to trim prices…

    but here is hard data — about as clear as data can get –
    which tells them unequivocally that it isn’t _amazon_ that is
    creating this $10 barrier. it is the e-book customer, doing
    what customers always do, which is set the transaction price.

    customers are only willing to pay $10 for an e-book. period.
    get that through your thick skulls, you corporate publishers.
    shortcovers lets you price your e-books at whatever you want,
    but customers just aren’t buying if the price goes up over $10.

    tamblyn also points out that the average price for a p-book is
    $14.15, and suggests ways that the corporate publishers might
    be able to edge up the price that customers are willing to pay for
    e-books, such as by making their e-books more beautiful, etc.

    that’s lunacy, of course, and if you don’t know why, i’ll tell you.

    tamblyn acts like the $9.99 pricepoint is the _floor_ from which
    publishers can work to milk more money out of the customers…

    in reality, that $10 pricepoint is a _ceiling_, and customers are
    willing to pay that much for inferior goods (e.g., ugly e-books)
    for the time being because “it’s the best compromise available”.

    but in the long run, customers will be looking for lower prices.

    and, if it was just customers that were looking for lower prices,
    that would be one thing. but the other part of this equation is
    that there will be publishers who are willing to give lower prices.

    indeed, when publishers find they make _4_times_ as many sales
    at the $5 pricepoint compared to the $10 pricepoint, they will be
    falling all over themselves to lower prices and scoop up profits…

    (i didn’t just make that situation up; that you will get 4 times as
    many sales if you halve the price; you’ll find it’s not uncommon.)

    remember the _most_important_thing_ about electronic-books!
    remember that it is that their _variable_cost_approaches_zero!_
    that is, it costs you very little to have more people download a file.

    so your cost-of-goods (cog) for 4-times-as-many-e-books-at-$5 is
    _exactly_the_same_ as your cost-of-goods for 1x- as-many-at-$10.
    but instead of making $10 on a sale of 1 e-book, you make $20 on 4.

    (you also create 4 happy customers instead of 1 merely-satisfied one,
    which helps you in the long run as well, but forget that for right now.)

    so no sooner will that $10 pricepoint become “established” than will
    the savvy mammal publishers start undercutting it to half that much.

    and they’ll _succeed_, since they’re making _twice_ as much _profit,_
    plus they are building a customer-base that is _four_ times bigger!

    of course, then the $5 pricepoint will be reduced to $3, then $2, and
    at some point this zeno’s paradox has to end, but where, precisely?

    and this is only when we’ve factored in the profit-minded publishers!

    once you realize that many authors will put up their e-books for free,
    “because it’s better than having the thing sitting in my desk-drawer”,
    the pricing-pressure from the bottom-end will be even stronger…

    and we know what corporations do when they cannot make profits;
    they leave the sector, and leave it quickly, and never ever come back.

    so tamblyn’s scenario, where the big corporate publishers are gonna
    start charging more and more money for their e-books is a _sham_.

    it’s simply not gonna happen that way. it’s a big fairy-tale, a dream.
    and it is his own chart that tells you exactly why that will be the case.

    but hey, the big corporate publishers are buying snake-oil these days,
    whether it comes in d.r.m. form or some other, because they so badly
    want to hang on to those fat profit margins they recall from the past.

    -bowerbird

  • bowerbird

    now let’s address the third major problem with tamblyn’s analysis…

    tamblyn argues for a cloud-centered library. that is, your e-books
    would be backed up “in the cloud” so that you can access them from
    any machine in any location, just by proving that you are you…

    this is a nice idea. tamblyn explains the idea as if shortcovers was
    the entity that invented it. i won’t bother to go back and look at all
    the timelines, but i’d say actually amazon was doing it first, way first.
    and fictionwise/baen did it _years_ before amazon, so way way first.

    and yeah, storing your e-books online, as backup and for access, is
    a glorious idea. i think it’s smart to download those e-books from
    the cloud to your own machines, and to backup machines as well,
    because you just never know when a cloud will simply “evaporate”,
    and — poof — there go all your e-books, never to return to you…

    so, you know, why put yourself at the mercy of someone else’s cloud?

    why not have your very own cloud?, where you store your own stuff?

    i mean, really, do you want to have to run around to a dozen places,
    saying, “excuse me, i know i’ve bought a copy of ‘alice in wonderland’,
    and i know it’s in some bookstore-cloud or publisher-cloud somewhere,
    i’m just not sure which one, could it be you?” no, you probably don’t…

    you wanna go to your own cloud and say “alice in wonderland please”,
    and not have to wait or prove you are you or that you bought the book.

    that’s what everyone is going to do, eventually, have their own cloud,
    where they store their own stuff — like their photos and their movies
    and their e-books and their blogs and their documents and everything.
    in fact, when you buy an e-book, you’ll have it delivered to your cloud.

    so, yeah, you know, if shortcovers wants to back up my stuff too, fine.
    just so long as i can get a copy of the e-book to put in my own cloud.
    (and — good news — shortcovers does allow you to download a copy.)

    and if shortcovers thinks it can extract a premium on every e-book that
    i buy, just because they are “putting it in the cloud”, i’m not interested;
    that’s not an add-on that i am willing to pay any additional money for…

    -bowerbird

  • bowerbird

    gosh, it was just a few days ago that i talked about
    the unpleasantness of having to depend on _adobe_
    to maintain the infrastructure of the e-book world…

    if you’re familiar with the “adobe digital editions”
    crapware, then you know what i’m talking about.

    looks like i made that post just in time…

    and now we learn adobe is laying off 600+ people,
    including their primary .epub evangelist, bill mccoy.
    (they also did a 600+ purge at the end of last year,
    so should qualify for some kind of scrooge award.)

    anyone familiar with the “embrace/extend/extinguish”
    dramatic arc will know that putting someone out front
    as the point man to make lots of comforting promises,
    and then later on removing him from the company, is
    standard operating procedure. so this is unsurprising.

    also unsurprising is the rhetoric flowing out of adobe:
    > Adobe Expanding Investment in Digital Publishing
    > http://blogs.adobe.com/digitaleditions/2009/11/adobe_expanding_investment_in_digital_publishing.html

    as adobe put it:
    > As part of a restructuring announced yesterday,
    > Adobe has made the decision to
    > expand its investment in digital publishing,
    > creating a new organization focused on
    > delivering products to increase
    > digital revenue opportunities for
    > book, newspaper and magazine publishers.

    you don’t have to be a rocket scientist to figure it out;
    the translation is: “now we’re gonna cash in our chips.”

    lastly, perhaps the most amusing little bit of gossip is what
    mccoy wrote on his read-it-before-adobe-deletes-it blog:
    > I believe that Adobe will continue to play a critical role
    > as an enabler of interoperable solutions, but I also believe
    > that the community needs to stay vigilant to ensure that
    > for-profit corporations don’t just talk the talk about
    > being open, but also walk the walk.

    let’s see how long adobe walks the walk.

    -bowerbird

    p.s. on the other hand, i can’t think of anything that
    will be more damaging to the concept of d.r.m. than to
    place its administration in the bumbling hands of adobe.
    you just know that we’re going to have a ton of frustrated
    consumers out there venting against both d.r.m. and adobe.
    hopefully, the customer revolt knocks sense into publishers.

  • bowerbird

    whoa, i’d forgotten about this thread…

    i was reminded by a tweet pointing to this:
    > http://links.toc.oreilly.com/midlist-author-runs-the-numbers-on-self-publi

    that points to this:
    > http://jakonrath.blogspot.com/2009/10/kindle-numbers-traditional-publishing.html

    and that contains this interesting tidbit on kindle sales:
    > We can draw a simple conclusion looking at these sales:
    > a $4 ebook sells 3 times as many copies as an $8 ebook.

    i said above that you get 4 times as many sales, which is
    what some publishers have found, not 3 times as many,
    which is what konrath finds. but the principle is the same.

    in this case, it amounts to 50% more profit, $12 versus $8,
    and 3 times as many readers (which impacts future sales).

    or as konrath puts it:
    > in other words, because Hyperion has my ebook rights,
    > I’m losing $15,762 per year.

    -bowerbird

  • bowerbird

    speaking of adobe handling d.r.m. in the .epub infrastructure…

    if you bought anything under adobe’s older version of d.r.m.,
    you have until december 15th to upgrade it to their new version.

    if you don’t upgrade, you lose what you thought you’d “bought”,
    in the sense you’ll never be able to move it to another machine.

    > http://www.adobe.com/products/contentserver/migrate.html

    did you buy any content that used the old adobe d.r.m.?
    how would i know? don’t you keep track of these details?

    this is the kind of thing ensuring the long-term death of d.r.m.

    -bowerbird