The App Store and the Long Tail Part 2: The Real "DRM" At Stake

Andrew Savikas
August 10, 2009 | Permalink | Comments (5) | Listen

Note there's a lot of images in this post, so if you're reading it via RSS, you may want to click through to the original post if you can't see the images.

A few weeks ago I wrote about how the small number of sales from many different countries were adding up to more than the large number of sales from the US in the App Store for our books. That trend has continued (and accelerated), and right now about 60% of our App sales are coming from outside the US:

When I've talked with other publishers about our success with iPhone Apps, they typically discounted what I said because I was talking about iPhone: The Missing Manual, a title particularly suited to the device. And to a degree, that's a fair argument, and I don't expect very many other books-as-apps to sell as well as that one. But the results for the next batch of 17 titles is instructive. For the two-week period of July 20 to August 2 (the first two calendar weeks the apps were on sale), five of the 17 titles sold more units as iPhone apps than via print (as measured in Bookscan). Here's a comparison across all 17 titles:

That got me wondering why there's not stronger interest from other publishers, especially trade publishers, in iPhone apps (besides concerns about pricing and the approval process). Then as I was looking at rankings for some of the top paid book apps, I spotted a possible answer.

In the App Store, each country has its own top 100 lists (overall and for each category, and for free as well as paid). Something that's #1 here in the US may not even register on the top 100 in another country. Here's the current (as of this writing) worldwide rankings for the "Classics" App, the #1 paid book app right now:

Classics is one of the most popular paid book apps in nearly every country with iPhone service (the list actually goes further down than shown above).

Now here's the current (as of this writing) worldwide rankings for "Twilight" which has been holding steady in the top 25 paid apps here in the US:

Yup, that's it. Just the US. Presumably this is a rights issue -- Hachette either doesn't have the rights to sell this book as an App anywhere else, or they're choosing not to. But taken in light of our own sales of nearly 2/3 outside the US and the data from Classics, that means a publisher who can't (or won't) sell their app outside the States is missing a lot of the market. Here's the current rankings for the "A Twilight Trivia" app, which is ranked above Twilight in the US (and is not affiliated with Hachette or Stephenie Brown):

So there's clear interest in the Twilight content on the iPhone outside the US -- enough interest to keep this app well into the top 100 paid book apps in dozens of countries.

Perhaps the most important "digital rights management" at stake right now is that of the rights to sell digital content globally.

If you're planning to attend the Frankfurt Book Fair, producing and selling digital and mobile content from a global perspective will be a big part of the program at TOC Frankfurt on Oct. 13.

Does Digital Cannibalize Print? Not Yet.

Andrew Savikas
August 7, 2009 | Permalink | Comments (10) | Listen

One of the big risk factors publishers think about when it comes to digital books is that they will cannibalize print sales. Factor in the lower prices we're seeing for ebooks, and it's a quite reasonable concern.

Looking at data on sales from our website, at first glance that would appear to be exactly what's happening:

Over the past 18 months, we've gone from print outselling digital by more than 2:1 to just the opposite.

But that's not the full story. If there really was cannibalization happening, you'd expect to see our print sales underperforming the overall computer book market, but that's not what's happening. Here's a comparison of how our sales (as measured by Bookscan) stack up against the broader computer book market. The data here is normalized (the first period in the graph is set to 100, and subsequent results are calculate relative to that period):

Roger Magoulas, who heads up our Research Team (which is doing some way cool stuff with App Store data) put it this way in a recent backchannel email covering this as part of a larger analysis:

By looking at the data and these charts we infer that while O'Reilly physical book sales are down compared to last year, this seems more the result of the drop in demand for computer books since the financial meltdown than the impact of ebook sales. Since O'Reilly is a relatively prolific publisher of econtent we would expect that ebooks would affect O'Reilly's physical book sales more than other publishers and we don't see that evidence in these results. Even if ebooks are taking a bite out of O'Reilly physical book sales, we see no negative effect on O'Reilly's slightly increasing share in the physical book market nor on how O'Reilly's sales correlate with the overall market for physical computer books.

So, for now, if what we infer is correct, you can put away your exorcism crosses, ebooks seem more a legitimate expanded market opportunity than a projectile vomiting Linda Blair wannabe.

Anderson: "It's All About Attention"

Andrew Savikas
July 29, 2009 | Permalink | Comments (0) | Listen

Over on Spiegel Online, Chris Anderson does a great job responding to nearly all of the standard old-media responses to new media. Unsurprisingly (I'm sure Wired would have done the same) they pulled one line from a lengthy response to create the provocative title "Maybe Media Will Be a Hobby Rather than a Job." The full passage is much more useful and nuanced:

In the past, the media was a full-time job. But maybe the media is going to be a part time job. Maybe media won't be a job at all, but will instead be a hobby. There is no law that says that industries have to remain at any given size. Once there were blacksmiths and there were steel workers, but things change. The question is not should journalists have jobs. The question is can people get the information they want, the way they want it? The marketplace will sort this out. If we continue to add value to the Internet we'll find a way to make money. But not everything we do has to make money.

The complete interview is worth a read.

Content is a Service Business

Andrew Savikas
July 13, 2009 | Permalink | Comments (25) | Listen

I've been a fan of Trent Reznor's music since first hearing Pretty Hate Machine in junior high school, but in the past few years I've been increasingly impressed by his attitude and approach to the economics of the modern digital media business. His release of Ghosts I-IV is a case study in how to do exactly what Kevin Kelly outlines in Better than Free : "When copies are free, you need to sell things which cannot be copied." Notice that even though the Free Download option is right there at the top, the $300 "ultra-deluxe" version is sold out (and was sold out within 24 hours of being released).

On his forum a few days ago, Reznor posted advice to aspiring young musicians eager to make it in the music business, and the advice is just as applicable to writers and other artists working in almost any digital medium and attempting to compete with the vast content available on the Web:

[W]hat you NEED to do is this - give your music away as high-quality DRM-free MP3s. Collect people's email info in exchange (which means having the infrastructure to do so) and start building your database of potential customers. Then, offer a variety of premium packages for sale and make them limited editions / scarce goods. Base the price and amount available on what you think you can sell. Make the packages special - make them by hand, sign them, make them unique, make them something YOU would want to have as a fan. Make a premium download available that includes high-resolution versions (for sale at a reasonable price) and include the download as something immediately available with any physical purchase. Sell T-shirts. Sell buttons, posters... whatever. [emphasis added]

This is not just about using free digital content to sell physical goods. It's an acknowledgment that what you're selling as an artist (or an author, or a publisher for that matter) is not content. What you sell is providing something that the customer/reader/fan wants. That may be entertainment, it may be information, it may be a souvenir of an event or of who they were at a particular moment in their life (Kelly describes something similar as his eight "qualities that can't be copied": Immediacy, Personalization, Interpretation, Authenticity, Accessibility, Embodiment, Patronage, and Findability). Note that that list doesn't include "content." The thing that most publishers (and authors) spend most of their time fretting about (making it, selling it, distributing it, "protecting" it) isn't the thing that their customers are actually buying.

Whether they realize it or not, media companies are in the service business, not the content business. Look at iTunes: if people paid for content, then it would follow that better content would cost more money. But every song costs the same. Why would people pay the same price for goods of (often vastly) different quality? Because they're not paying for the goods they're paying Apple for the service of providing a selection of convenient options easy to pay for and easy to download.

This is not new to digital content. Why would the price of admission to see a given year's Razzie Award winner be equivalent to the price of admission to see the year's Best Picture? Because the price of admission is not for the content. It's for the privilege of seeing it early, and doing so on a big screen in a social environment -- movie patrons pay for the service provided by the theater, not for the movies themselves (here's a counterpoint on movie pricing). That's the point that Reznor and Kelly are making: think long and hard about what your customers want, and provide the service of giving that to them.[1]

"But people are still buying content when they buy a book or an album," the argument goes. Yes, they are. The same way that you're buying food when you go to a restaurant. You are purchasing calories that your body will convert to energy. But few restaurants (especially those you visit frequently) have ingredients any different from those you can get yourself at the corner store, for much less money. So it can't be true that your primary goal is to purchase food; you're purchasing a meal, prepared so you don't have to, cleaned up so you don't have to, and done so in a pleasing and convenient atmosphere. You are paying for the preparation of the food and the experience of eating it in the restaurant, not the food itself [2] (beyond the raw cost of the physical ingredients, which in the case of digital content is effectively zero).

This came up during a discussion on Peter Brantley's email list recently, in the context of what someone is paying for when they buy one of our Cookbooks (which contain "Recipes" for how to accomplish specific tasks with a particular computer language or technology, often culled and curated from material and techniques previously published in blog posts, mailing lists, or help forums). I asserted that rather than the content itself, people are paying for the preparation of that content, to the extent that it helps them solve their problems more quickly and conveniently. When you think about what we do as a service business, then it makes perfect sense: readers are paying us for the service of finding a bunch of great and interesting stuff, and putting it together in a convenient package. It's the convenience of not having to find it themself, and the concise package that saves them from having to dig through a bunch of web bookmarks or search results. I didn't buy "Home Buying for Dummies" last year because I wanted a book on home buying; I bought it because I didn't want to screw up something really important (buying a house) and was willing to pay someone to spell out all of the stuff I needed to worry about in one place. People don't buy Jim Cramer's books because they want Jim Cramer's content -- they buy his books because they think it will help them get rich, and they think paying him is a great shortcut alternative to acquiring his knowledge (knowledge, not "content") themselves. These are services, not products.

The recent (and absurd) notion put forward by European publishers to "strengthen copyright protection as a way to lay the groundwork for new ways to generate revenue online" is intimately tied up with this issue of the value of content (and therefore the value of various players in the content value chain, like authors, publishers and the latest bogeyman, aggregators and search engines). Arguing that you need to beef up copyright protection to make sure there are ways to generate revenue online incorrectly assumes that what people are paying for is the copyrighted content itself. People do not care about content, they care about themselves and their problems.

You don't get an "A" for effort just by spending time and money creating content (and you are not entitled to your business model -- you have to earn that money every day by doing something that people find worth paying for -- and they decide it's worth paying for, not you). Content only has value to the extent that someone will pay for it because it accomplishes something they'd rather exchange money for than do themselves -- and when was the last time you said "Gee, I really need some content. I could write some of it for myself to read today, but I'd rather pay someone else to do it." [3] Google and other aggregators haven't stolen any value from the creators of the content they are aggregating -- they have done what intermediaries have always done, which is create new value based on doing for customers what those customers cannot or do not want to do themselves -- the service of sorting through all that content to find the thing that solves their problem. (I use "problem" loosely -- it may be boredom, loneliness, a tax audit, an idea for a first date,...) Again I'll return to Kevin Kelly, who elucidated the role of aggregators in relation to content creators far more eloquently than I ever could:

The giant aggregators such as Amazon and Netflix make their living in part by helping the audience find works they love. They bring out the good news of the "long tail" phenomenon, which we all know, connects niche audiences with niche productions. But sadly, the long tail is only good news for the giant aggregators, and larger mid-level aggregators such as publishers, studios, and labels. The "long tail" is only lukewarm news to creators themselves. But since findability can really only happen at the systems level, creators need aggregators. This is why publishers, studios, and labels (PSL) will never disappear. They are not needed for distribution of the copies (the internet machine does that). Rather the PSL are needed for the distribution of the users' attention back to the works. From an ocean of possibilities the PSL find, nurture and refine the work of creators that they believe fans will connect with. Other intermediates such as critics and reviewers also channel attention. Fans rely on this multi-level apparatus of findability to discover the works of worth out of the zillions produced. There is money to be made (indirectly for the creatives) by finding talent. For many years the paper publication TV Guide made more money than all of the 3 major TV networks it "guided" combined. The magazine guided and pointed viewers to the good stuff on the tube that week. Stuff, it is worth noting, that was free to the viewers. There is little doubt that besides the mega-aggregators, in the world of the free many PDLs will make money selling findability -- in addition to the other generative qualities.

I love his metaphor of the internet machine ("a very large device that copies promiscuously and constantly"), and it's one worth keeping in mind if you think you're in the business of selling "content," because you are probably wrong.

Update: Jim Lichtenberg kindly reminded me he gave a presentation [PPT] on the same topic at the 2008 TOC Conference. Worth a read.

1. Many publishers have actually been doing the same thing for years with hardcover, trade, and mass-market editions of the exact same content at different prices.

2. This is why celebrity chefs aren't particularly worried that doing TV shows and selling cookbooks describing exactly how to make the food they serve in their restaurants will harm business.

3. There are people who do in fact want to pay someone to write content for them as a service. They're called publishers.

Inside Look at RAND's $9.95 Ebook Pricing Strategy

John Warren
June 9, 2009 | Permalink | Comments (3) | Listen

Recently, the RAND Corporation announced that it has revised the suggested retail pricing on all RAND ebooks to $9.95 each. RAND ebooks are available through a wide variety of wholesale and retail partners.

The press release provided some explanation for the decision, also discussed in Publishers Weekly. I have been asked by Tools of Change to provide some additional insight into our ebook pricing strategy.

There were several things that went into our thinking on, as one of my colleagues appropriately called it, this "new math." Some of these factors will generally not apply to other publishers, though I do believe some factors should, and eventually will, affect other publishers' pricing strategies as well.

• First of all, and this is important, RAND is not a traditional publisher. RAND is a nonprofit institution that helps improve policy and decision making through research and analysis. RAND research, which spans a broad base of subjects and is funded through hundreds of resources, is dedicated to serving the public interest. RAND's focus is on conducting objective, high-quality research, and every publication endures a rigorous review processes. These exacting standards are the foundation of RAND's impeccable reputation throughout the world. No consideration is made on whether a particular topic or book might be a good title for sales -- the emphasis is on quality of the research. In addition, RAND's revenue comes primarily from its research and philanthropic support, not from the sales of books and ebooks.
• Going along with the first point, a crucial component of RAND's mission is operating in the public interest. This was written into the our charter, in 1948: "To further and promote scientific, educational, and charitable purposes, all for the public welfare and security of the United States of America." This is one of the reasons why we post all of our publicly available books and reports online for free PDF download; we had ~4.3 million PDF downloads from our site last year. Dissemination is more important than sales. (I do believe there is a compelling argument, supported by many, that free electronic dissemination helps drive sales, instead of cannibalizing sales.) We have posted all new titles since 1998 on our Web site, and sales of book sales have still increased during that period.
• Book sales help support the marketing and publishing program, but the main consideration, as a nonprofit, is to break even, not recoup a huge profit. Book sales need to recoup the costs of printing, distribution, marketing, etc., and with ebooks, conversion costs.
• Previously, we had been pricing ebooks at the price of the printed book, which in our case is nearly always paperback; we publish few hardcovers. This seems to be the most common model for publishers, price the ebook at the print price. RAND prints nearly everything print on demand (POD), and sells the majority of our print titles through our distributor, NBN, so the price of the print book factors in POD and distribution costs. POD cost rises when the book is longer in length and/or has color charts or graphs. Thus one book may be priced at $44 because of color charts, another may be $25 because it is shorter in length and entirely black and white. These factors have nothing to do with an ebook, however. Ebooks are agnostic as to length (except as the length may affect the costs of editing) and color charts and graphs have no bearing compared to black and white in terms of ebook costs.
• We have no manufacturing, distribution, or warehouse costs with ebooks, nor do we have to deal with returns, so the back end is much cleaner.
• I believe firmly that customers have an expectation, which is only likely to grow, that ebooks should cost less than printed books. I believe this is being reinforced, but not driven by, Amazon's decision to make many Kindle ebooks $9.95, even when they must pay the publisher more. I don't believe they pulled that number out of thin air, though that is possible. At $9.95, RAND hopes to make up in volume what it may lose in profits from a higher price on each ebook.
• Library funding is tight. Increasingly, libraries want to buy ebooks on demand, when a patron asks for it, not before. Jobbers and wholesalers are now entering into relationships with ebook distributors to aggregate ebook purchases, and the library market is a key market for us to reach. Libraries may balk at $35 for a printed book, or lack the shelf space to store it, but they can afford and store a $9.95 ebook.
• Since we post PDFs for free download, two reasons we are able to sell ebooks on other sites such as Amazon.com, Books 24x7, EBL/ebooks.com, ebrary, Ingram Digital/ MyiLibrary, netLibrary and Questia, and soon Sony and Overdrive, is from a convenience standpoint (customer has a particular device and wants it seamlessly integrated, or a library subscribes to an ebook service and makes all titles available to their patrons) and/or ignorance (the customer may not be aware that we post PDFs for free). I don't want to bank on customer ignorance, but the convenience factor can hold up over time.

These are the main factors influencing our decision making on this new ebook strategy. It will be interesting to see if others follow.

John Warren is marketing director, publications, at the RAND Corporation. He contributes to the Publishing Frontier blog. He was recently selected as the winner of the International Award for Excellence in the development of the book for his paper, "Innovation and the Future of ebooks," which is available for free download on the RAND Web site.

Google's Browser-Based Plan for Ebook Sales

Mac Slocum
June 1, 2009 | Permalink | Comments (5) | Listen

BEA '09 may be remembered as the moment when Google formally entered the ebook market. From the New York Times:

Mr. [Tom] Turvey [director of strategic partnerships at Google] said Google's program would allow consumers to read books on any device with Internet access, including mobile phones, rather than being limited to dedicated reading devices like the Amazon Kindle. "We don't believe that having a silo or a proprietary system is the way that e-books will go," he said.

He said that Google would allow publishers to set retail prices. Amazon lets publishers set wholesale prices and then sets its own prices for consumers. In selling e-books at $9.99, Amazon takes a loss on each sale because publishers generally charge booksellers about half the list price of a hardcover -- typically around $13 or $14.

In addition -- and this is pure conjecture on my part -- Google's push into HTML 5 is a potential shot across the bow of e-reader manufacturers. Assuming it's widely implemented, HTML 5 will further blur the line between standalone software and Web browsers/cloud-based content. Toss in Google's Chrome browser and the Gears plugin and you can see how the dots (might) connect.

According to the Times, Google intends to launch its ebook project in 2009. This effort is separate from the pending Book Search agreement.

Related Stories:

• TeleRead: "Google wants to sell e-book access directly: ePub ramifications? Not just hassles for Amazon?"
• paidContent: "Google Promises Publishers (And Amazon) Will Sell E-Books In 2009"
• New York Times: "Steal This Book (for $9.99)"
• Sony-Google Deal Adds 500k Public Domain Books to E-Reader

Ebook Piracy is Up Because Ebook Demand is Up

Andrew Savikas
May 12, 2009 | Permalink | Comments (8) | Listen

My email, twitter, and "real-world" information stream is abuzz today with references to a New York Times story about the increase in piracy of ebooks:

“It’s exponentially up,” said David Young, chief executive of Hachette Book Group, whose Little, Brown division publishes the “Twilight” series by Stephenie Meyer, a favorite among digital pirates. “Our legal department is spending an ever-increasing time policing sites where copyrighted material is being presented.”

John Wiley & Sons, a textbook publisher that also issues the “Dummies” series, employs three full-time staff members to trawl for unauthorized copies. Gary M. Rinck, general counsel, said that in the last month, the company had sent notices on more than 5,000 titles — five times more than a year ago — asking various sites to take down digital versions of Wiley’s books.

The reason there's an "exponential" increase in piracy of ebooks is because there's an exponential increase in demand for ebooks:

That's not a bad thing! It's an indicator of unmet demand (and in particular for non-DRM encrypted content). I know I have no interest in buying an ebook that's locked to a single vendor or device, and I'm sure many of these "pirates" feel the same. This is a good time to revisit Tim O'Reilly's seminal Piracy is Progressive Taxation, which includes the following lessons:

1. Obscurity is a far greater threat to authors and creative artists than piracy.
2. Piracy is progressive taxation.
3. Customers want to do the right thing, if they can.
4. Shoplifting is a bigger threat than piracy.
5. File sharing networks don't threaten book, music, or film publishing. They threaten existing publishers.
6. "Free" is eventually replaced by a higher-quality paid service.
7. "There's more than one way to do it."

I'm not suggesting publishers stop sending those DMCA notices; but 3 full-time staffers? Putting those resources toward building new ways to meet that demand is a much better investment.

Coincidentally, our research report Impact of P2P and Free Distribution on Book Sales is now available.

Amazon Demos Large Screen Kindle DX

Mac Slocum
May 6, 2009 | Permalink | Comments (3) | Listen

Amazon released the large-form Kindle DX this morning. Notable specs include:

• The $489 DX ($130 more than Kindle 2) will be shipped this summer. It's currently available for pre-order through Amazon.com
• The DX screen measures 9.7 inches diagonally; 3.7 inches larger than the Kindle 2. Including the frame and keyboard, the DX is 10.4 inches high x 7.2 inches wide x 0.38 inches deep.
• The DX holds 3,500 books. Kindle 2 holds 1,500.
• The DX has built-in PDF support. The Kindle 2 requires conversion through the Personal Document Service, which was recently switched to a $0.15 per megabyte variable fee.
• Auto-rotation switches between portrait and landscape modes.

During this morning's demonstration, Amazon CEO Jeff Bezos addressed the DX's two target markets: textbooks and newspapers. Bezos announced an agreement with Pearson, Cengage and Wiley to bring textbooks to the device.

In its live-blog coverage, Engadget offered this quote from Jeff Bezos in regard to newspapers:

"We're pleased to announce that three papers have signed on with us, the NYT, Boston Globe, and the San Francisco Chronicle. They will offer reduced prices for long term commitments on subscriptions."

Adam Ostrow from Mashable says the "reduced prices" pertain to the cost of the Kindle DX, but I'm looking for clarification. Technically, those price reductions could apply to subscription fees. The Kindle-based New York Times subscription currently costs $13.99 per month, and the Times may knock that monthly fee down in return for a multi-year commitment. More to come ....

(Update, 5/6/09, 2pm) -- Ars Technica says a lower-cost DX will be available with newspaper subscriptions. Further details have not been announced.

Sony-Google Deal Adds 500k Public Domain Books to E-Reader

Mac Slocum
March 19, 2009 | Permalink | Comments (2) | Listen

Sony is adding 500,000 public domain EPUB-based titles to its Reader catalog through a partnership with Google. Paul Biba at Teleread examines Sony's rationale:

Sony's apparent intent, meanwhile, beyond adding value to the Reader, will be to use public domain books in ePub to entice people to install its software and in time buy its reader devices.

In the exclusive TeleRead interview, Steve [Haber, President of Sony's Digital Reading Division] emphasized that this program is part of Sony's commitment to an open platform, as opposed to the closed platform of its major competitor (hint, hint, the name starts with an A). The ePub conversion is being done by Google itself, as noted; and Sony and Google are exploring ways to make copyrighted ePub material available.

Catalog expansion and mobile devices are propelling recent ebook/e-reader announcements. Google Book Search opened mobile access to its archive of public domain books in February, and Amazon recently made its Kindle titles available to iPhone and iPod Touch users through a free iPhone app.

Related Stories:

• Adam Hodgkin: "Google Books on Sony eBook Reader"
• Martyn Daniels: "Are Google Establishing Their Sales Channels?"
• New Sony E-Reader Has Touchscreen, No Web Connection
• Kindle vs Sony Reader: Battle of Distribution Channels
• Bookworm Online EPUB Reader Now Part of O'Reilly Labs

One-Question Interview at BookNet Canada Tech Forum

Andrew Savikas
March 19, 2009 | Permalink | Comments (1) | Listen

Last week I had the pleasure of speaking at the 2009 BookNet Canada Technology Forum in Toronto (motto: Even colder than you expected!), and Mark Bertils caught up with me on my way out for a quick video interview:

Two follow ups on what I said, now that I have my del.icio.us feed handy:

• The Peter Drucker reference is from his 5 Deadly Business Sins: "Cost-driven Pricing. The only thing that works is price-driven costing. The only sound way to price is to start out with what the market is willing to pay--and thus what the competition will charge--and design to that price specification."
• It was Mike Shatzkin (referencing Michael Cader) who made the recent point about the relative low cost of experimentation for publishers around pricing digital products: "You can't get rich or go broke whether you price the ebook 50% too high or 50% too low. Try everything. You'll never have a cheaper opportunity to experiment."

Related Stories:

• Pricing Digital Book Content: Where's the Sweet Spot?
• Expectation of Fair Pricing, Not Free
• Joe Wikert: "iPhone App Store Price Sensitivity"

Hearst Gets Into the E-Reader Game

Mac Slocum
February 27, 2009 | Permalink | Comments (0) | Listen

Hearst Corp. is developing its own wireless e-reader that may debut this year. From Fortune:

According to industry insiders, Hearst, which publishes magazines ranging from Cosmopolitan to Esquire and newspapers including the financially imperiled San Francisco Chronicle, has developed a wireless e-reader with a large-format screen suited to the reading and advertising requirements of newspapers and magazines. The device and underlying technology, which other publishers will be allowed to adapt, is likely to debut this year.

The larger screen size will put the Hearst reader in the same class as devices from Plastic Logic and iRex.

Fortune says Hearst isn't discussing product specs, but the company has a longtime association with E Ink. Last September, Esquire published the first E Ink magazine cover.

Related Stories:

• What Does Esquire's E Ink Cover Mean for Print Publishing?
• France Telecom E-Reader Includes Subscriptions
• What Would Your Ideal E-Reader Look Like?

Indigo's Shortcovers Launched Today: A Good Start, But Room for Reader Improvement

Andrew Savikas
February 26, 2009 | Permalink | Comments (4) | Listen

The Shortcovers website and companion iPhone and Blackberry apps launched today (we posted a sneak preview back in January). Put simply, it's a website for buying ebooks. But there's a few interesting twists that (for now) set it apart.

Though most of the current content is books, the primary unit of the service is the "shortcover" -- things like an article, a blog post, and a book chapter. That means publishers have the option of making individual chapters available for sale (or as free samples). But perhaps the more interesting consequence of that is something they're calling "mixes," where readers can combine multiple shortcovers into a single "mix" (think iTunes playlist), and share that with other readers. Though my search was admittedly brief, I wasn't able to find any for-pay content available for inclusion in a mix.

They also definitely understand the social aspect of reading. Beyond the mixes, readers can also upload their own content, rate content, and share content (via Twitter or email).

On the downside, right now although some content is downloaded locally to the iPhone, most of the service only really works when you're online. Also, the navigation within books isn't very intuitive, and the interfaced doesn't drop away while reading (the navigation and settings bars at the top and bottom remain on screen while reading).

And (sadly unsurprisingly), the reader appears to have trouble displaying complex content like lists and tables, and computer code (the ones I looked at either didn't display the code at all, or displayed it in regular variable-width font). I've sent a note to the Shortcovers folks to try and learn more, but I'm continually surprised with how poorly many of these reading systems (including the Kindle, until very recently) have handled kinds of content that have been part of standard HTML for well over a decade. Here's some screenshots of the problem:

I'd be more sympathetic if the iPhone SDK didn't already include the WebKit framework for rendering HTML. Sigh.

But overall it's a decent start, and an impressive first real entry into the mobile reading space from an existing print retailer.

Several more iPhone screenshots are below:

Expectation of Fair Pricing, Not Free

Peter Brantley
February 23, 2009 | Permalink | Comments (7) | Listen

At Dear Author, a post stating that not all content should be expected to be free; rather it must be provided, free or not, in a realistic understanding of consumer needs and expectations, which might mean changing the way you do business.

What content providers must realize is that a changing business model wherein revenues are no longer captured in the same way does not mean that content is not without value or that people will not pay, in some way, to use that content. I think many people recognize that in order to have worthwhile content, we must pay in some way for it. Consumers have reduced the value of the album, but have not determined that music itself is without value. Consumers might believe that digital books have reduced cost given the costs of production, distribution and warehousing; but it is not our belief that books are without value altogether or that all books must be provided for free. I think what consumers are looking for is a fair trade. Content creators provide the best content they possibly can and for a fair price allow the consumers to utilize it in the way that it fits into their lives.

Related Stories:

• Joe Wikert: "iPhone App Store Price Sensitivity"
• Essential Points in the Free Debate
• Author Notes Risks and Opportunities in Free Ebooks
• How Do Publishers and Authors Get Paid in a "Free" World?
• Piracy is Progressive Taxation ...

Are Ebook Device Makers Missing the Market?

Andrew Savikas
February 16, 2009 | Permalink | Comments (1) | Listen

Over on Dear Author, Jane Litte suggests current ebook device marketers aren't effectively targeting what is likely the most influential segment of their market -- women:

The idea is to get women thinking that the vehicle fits into their lives, rather than the woman fitting her life around the vehicle. The most recent Kindle 2.0 ad shows a business man leaning up against the post reading a Kindle and a woman on the beach reading her Kindle, all alone. Seriously? What woman has frequent escapes to the beach where she is alone!

...

Ads need to show women reading on the bus, train, subway. Ads should show a woman leaning against a post waiting for a ride or in her SUV waiting to pick up the kids from practice or in the lunch line or grocery store line or waiting at the post office or in the doctor's waiting room. The point of the ads should be that the device is there whereever a woman is, whenever a woman wants it. It should not point out that the only time you can read an ebook is when you are alone and in the park.

Lot of great stuff -- the full post is well worth a read (and props to the Dear Author folks for a killer iPhone version of their blog).

Google Opens Mobile Access to Public-Domain Books

Andrew Savikas
February 5, 2009 | Permalink | Comments (2) | Listen

Via a Google press release, word that visiting books.google.com/m provides mobile access to 1.5 million public-domain books from within Google Book Search:

Today, we're making it possible for anyone with an Android or an iPhone to find and read more than 1.5 million public domain books in the US (more than half a million outside the US) in the Google Book Search index for free on their mobile phone, from anywhere with Internet access. It's possible for a commuter on a passenger train to read classics like Pride and Prejudice right along with lesser known works like Novels and Letters of Jane Austen, or for a student in India to read Shakespeare's "Hamlet" on her iPhone, all via a simple website accessible from your mobile phone.

So far, the mobile edition only offers browser-based access (Web-style scrolling, no offline access, no remember-my-place), but an interesting addition to the emerging and important mobile reading space. Screenshot below (or click here if you can't see the screenshot).

Google will be at next week's TOC Conference talking about the past, present and future of GBS.

Related Stories:

• ReadWriteWeb: "Google Book Search Goes Mobile"
• Connecting the Dots Between Google Book Search and Android
• Reaction to Google Book Search Settlement
• Magazines Now in Google Book Search
• Google Book Search: It's All About the Index

Good Company Culture Comes in Small Packages

Kate Eltham
February 5, 2009 | Permalink | Comments (8) | Listen

Common wisdom says that small companies are more nimble, responsive and adaptable than their larger cousins.

My personal experience reflects this. I've worked in large organisations -- FMCG corporates, international aid organisations and government -- and I've worked in small ones -- private consulting firms and small non-profits. In each case I've found that small enterprises outperform large ones when it comes to transformation. Smaller companies are faster to identify industry trends and respond to new business opportunities. They also punch above their weight on some forms of R&D, particularly business process innovation. Put simply, small companies are more fleet of foot.

But why?

We're seeing a lot of reports come through about how small publishers are responding to trends and opportunities. MediaBistro and The Christian Science Monitor have both reported small publishers are leading the charge when it comes to digitization. In his article, "E-book revolution favors the agile", Matthew Shaer said:

But it's not the bigger houses, such as Macmillan or HarperCollins, that are moving the fastest. Instead, some of the most extensive restructuring efforts are being undertaken in the independent publishing world, traditionally a hotbed for innovation and experimentation.

Soft Skull Press, Canongate, Akashic are all good examples. Shaer also points out that publishing is emulating the music industry in this pattern and, I'd wager, other industries as well.

Again, I ask why?

The obvious reasons are the ones people usually point to. Smaller companies are like the canary in the coal mine. They are first to feel the effects of major shifts within an industry and may need to move faster to find solutions. On the other hand, small publishers also have an incentive to exploit technological efficiencies that might even up the playing field against big competitors.

Small size also helps with changing direction. This week Wheatland Press announced it is taking a publishing hiatus in 2009:

What this means is that I will publish no new books during 2009 (including Polyphony 7). I will continue to fill orders on existing titles and will keep those titles available through Amazon and Barnes & Noble.com ... I will explore ways to put Wheatland Press on a firmer financial footing including, but not limited to, seeking external funding via arts councils, seeking partnerships with other presses, etc. I hope the break will allow me to return to a regular publishing schedule in 2010.

On one level this could be regarded as just another volley of bad news from a publisher affected by global economic conditions. But it's worth noting that only a small publisher could make this kind of decision. HarperCollins and Random House can't make the choice to stop publishing books for a year to sort out their business model and make necessary changes. They can cut costs through staff layoffs and tightening budgets, but their operational overheads are way too large to ever get off the treadmill of publishing hundreds of titles a year.

Underneath it all, though, the one thing that has the biggest impact on a company's ability to transform is the one thing that almost never gets talked about in the publishing industry: organizational culture. Paul Biba of TeleRead, quoted in the Shaer article, hints at this but doesn't quite nail it down:

"In general, I'd say the big publishers tend to be really dinosaurs, intrigued by e-books but afraid of them ... [Younger readers] have grown up with a whole different way of looking at the world, and I don't think many publishers understand this. They think people are just sitting down in leather chairs and reading hardcopy books."

I'm not sure this is a fair characterization of publisher attitudes today, but I do think it alludes to a bigger problem that is stopping large publishers from embracing new opportunities.

Big trade publishers are fighting a losing battle against their own organizational cultures. The history of business is littered with examples of companies that couldn't transition from one paradigm to the next, not because they couldn't see the necessity, but because they couldn't undertake the necessary internal change.

The larger a company is, the harder organisational change is to effect. The big trade publishers are now subsidiaries of the largest media companies in the world with thousands of employees, hundreds of offices and decades of crusted-on beliefs, traditions and systems. Small teams, by virtue of scale, can change their organisational culture quickly, sometimes through shifts in personnel, other times by the sheer force of personality from a charismatic leader. In any case, smaller teams tend to adopt a tenacious, can-do, try-anything culture because they have to.

Organisational culture is the bedrock of performance. This, more than any problem of physical infrastructure or technical or financial systems, makes big publishers slow to adapt. Too slow, I fear, to survive the speed of change within the cultural and economic ecology of which they are a part.

New experiments are popping up, such as HarperStudio, which could be the exception that proves the rule. Only by hiving itself off as a separate, entrepreneurial unit within HarperCollins, with its own small-team culture, has HarperStudio been able to achieve the clear-eyed perspective and momentum to try really different and new ways of publishing.

Paul Biba may have called it right by using the word "dinosaur." After all, it was the small dinosaurs, with modern-day descendants still thriving, who made the successful adaptation that evolution requires. The big guys fell hard and fast and it's increasingly rare to find any evidence of their impact on us at all.

Related Stories:

• Calling Out Risk-Averse Publishers
• Do Publishers Have the Stomach for Innovation?
• How Should Authors Promote Themselves Online?

The Coming Readers' Economy and Data Portability

Mac Slocum
January 23, 2009 | Permalink | Comments (3) | Listen

This is a guest post by Mark Bertils.

At the end of last year one event signaled a huge shift in how the book publishing industry will do business. It's not what you think. It was December's launch of Facebook Connect. A land grab for user identities followed. The Web's people economy is coming of age.

Facebook's Squid Tries to Eat the Internet's Whale

The Connect program wasn't new in December. It was announced in May 2008. It isn't even original. But it marks the coming-out party for Facebook's social graph. Users are now free to come and go from Facebook's walled garden. They can bring their Facebook-endorsed identity (and relationships) with them as they travel the Internet. It is a major development for the social Web. It is a further claim on the permanence and importance of these platforms. And it is the clearest marker yet that the social networking boom of the last five years has beget a new Internet-wide folks-economy.

Seemingly overnight online user identity (here I mean the entire Web -- every site, every service) became a battleground between Web giants. Google and MySpace are parrying. The OpenID foundation is the Red Cross. Everyone else is taking sides. Identity politics has never been so interesting.

But this is not simply about portable identities and the single-sign-on Web. It is a fundamental shift in the Web economy. It is a bold stride toward relationship monetization -- where user data exchange becomes the most important transactional unit on the Internet.

Readers Are The Most Important Asset

This is pivotal for book publishers and other creators of digital goods.

It is no secret that infinitely copyable products aren't worth very much, so naturally, value is moving up the food chain. As Softskull's Richard Nash recently wrote at the Harvard Business Publishing blog, in the future, monetizing and organizing relationships -- not products -- will pay publishers' rents.

To some degree this is happening already. O'Reilly Media have made conferences a large part of what they do. Harlequin's on-line role is largely to connect like-minded readers. And the reader economy is alive and well at the myriad of social networks for book lovers. But what of the other houses? How best to make this mindshift? How to redeploy the resources spent managing a supply chain of products to manage a supply chain of peoples' information?

BookDrop facilitates passing product info from one business to another. An analogue is needed for passing reader info between businesses. How is that going to happen? Who is going to do it?

Open Standards. Reader First.

The volunteers at Dataportability.org are already asking these questions. The group champions the unimpeded movement of user data around the Web. That includes user identities but it also extends beyond OpenID to include open address book standards, open calendar standards, and open standards for opinions, ratings and reviews. It is entirely grassroots and focuses on user-controlled, privacy-respecting data portability.

On their wiki, information specific to publishers and media organizations is thin but a need has been identified to standardize and provide guidance to publishers. The call is out for task-force volunteers to identify and report on the unique requirements within the generalized publishing domain.

To get the conversation started I have volunteered to be the interim chairman of the media publishers' dataportability task-force. I am hoping interested parties will step forward to fill the ranks of this group. The end goal is to publish a report that encourages the distribution and adoption of reader-friendly standards. If you, or someone you know, would interested in participating contact me at org.mark atgmail[.]com.

Mark Bertils is a grad student, reluctant technical writer, an aspiring technologist, and a book industry orphan. He maintains a blog at indexmb.com

Related Stories:

• Social Networking for Books: One Ring, or Loosely Joined?
• Why Blogging and Social Media Shouldn't be Ignored
• What OpenID Can Do for Academic Publishers
• ALA 2008: Librarians and Patrons Want More Openness
• Palm's webOS Represents Major Shift for Syncing and Data

"Kindle Killer" Might be Hyperbole, but a Lot to Like About Shortcovers

Andrew Savikas
January 20, 2009 | Permalink | Comments (7) | Listen

The email invitation I received to check out shortcovers -- a new hybrid Web/mobile reading site from Canada's Indigo Books & Music -- touted it as a "Kindle Killer." While there's a lot to like about shortcovers, there's some shortcomings to that moniker. First, it's not a device, it's a Web site with a companion iPhone app (presumably wending its way through Apple's approval queue) and eventually other mobile apps as well. Second, while I was very impressed with their execution, I didn't see much that Amazon couldn't match with a similar mobile App.

That said, I really liked what I saw of shortcovers (though to be fair, it's hard to truly judge something you've seen only via Webex -- my comments are based on a brief demo, and apply primarily to books). In particular:

• iTunes-style previews and a la carte purchasing. Buying single chapters won't make much sense for some kinds of content, but we know from experience at Safari that a lot of readers like that kind of chunking.
• Online/offline options. Adding "buy the print version" to the iPhone equation might be shortcovers' biggest contribution to the mobile reading market. Sure you can buy books from Amazon's iPhone app, but you can't also buy/read an electronic version at the same time. A lot of our ebooks are sold bundled with the print version, and it's a great option to offer customers. (Print orders are fulfilled by Indigo in Canada, and by an as-yet-unnamed partner in the U.S.)
• Cloud-style syncing. Buy from your phone, and the book appears in your online "Library" accessible from a browser. Offline downloads won't be available initially, though apparently are on the way.
• Recommendation and annotation. This was key to Amazon's rise to dominance in online book retailing -- its database of reviews and recommendations, a system that got smarter the more people used it.
• Support for the EPUB standard, and the option for publishers to make their content available without DRM. As long as there's a choice, the market should take care of the rest.

Overall, shortcovers probably isn't the revolution they're implying, but it is a big next step for mobile reading and ecommerce.

For additional viewpoints, The Wall Street Journal's Walt Mossberg recently reviewed shortcovers, and Chris Meadows on TeleRead has this counterpoint.

Related Stories:

• Cloud Computing's Potential Impact on Publishing
• Open Question: Standalone iPhone Ebooks vs. E-Readers
• Format Comparison: PDF, EPUB, and Mobi Downloads from Ebook Bundles
• To Chunk or Not To Chunk?
• Technology's "Killer" Distraction

"Amazon Tax" Moves Forward in New York

Mac Slocum
January 14, 2009 | Permalink | Comments (1) | Listen

A judge has dismissed lawsuits from Amazon and Overstock.com challenging New York's "Amazon tax," which was enacted last year. From the Associated Press:

The law applies to companies that don't have offices in New York, but have at least one person in the state who works as an online agent -- someone who links to a Web site and receives commissions for related sales.

In this case, "agent" is synonymous with "affiliate." Amazon and other online retailers share a cut of revenue generated by affiliate referrals. If further appeals go against Amazon and, as expected, other states jump on the sales tax bandwagon, affiliate programs of all sorts could take a major hit.

The AP notes that the law applies to "companies that have $10,000 or more in New York sales." There's some confusion around this $10,000 figure -- does it apply to companies that run affiliate programs (e.g. Amazon) and generate $10,000 or more in New York-based sales, or does it refer to affiliates who earn $10,000 through revenue share agreements? According to Law.com, the company that sells the products is held to the $10,000 standard. As such, a company could not skirt the law by cutting off individual New York-based affiliates before they reach $10,000 in referral sales. To avoid collecting New York sales tax altogether, companies would have to limit the combined income from all New York affiliates to less than $10,000.

(Via the Reading 2.0 list)

Related Stories:

• Law.com: "A Taxing Online Issue Out of New York"
• New York State Girds for War With Amazon
• The Realities of Big Web Traffic and Advertising
• Watch the YouTube Video, Buy the Product

iPhone App Outperforms Most Print (Computer) Books This Holiday Season

Andrew Savikas
January 7, 2009 | Permalink | Comments (20) | Listen

Conventional wisdom suggests that when choosing pilot projects, you pick ones with a high likelihood of success. It's hard to argue that iPhone: The Missing Manual was a reasonable choice for testing the iPhone App waters. But while we knew it would do well, we've been quite pleased with just how well:

• If the iPhone App by itself had been a book, it would be a top 10 seller in BookScan for Computer Books this holiday season, based on just 17 days of sales
• The print version appears to have been unaffected, retaining a solid position in the top 3 for Computer Books in BookScan
• A full 1/3 of those buying the app are outside the US, mostly in countries where the print book is not readily available

There are certainly some who don't care for the book-as-app approach, preferring the library model (where one app enables reading multiple titles). It's also clear there's substantial customer interest in both options, and we strongly believe that offering a variety of options and letting customers choose is the right approach. This is a time for experimentation, and we'll be doing quite a bit more of it (format, pricing, content) in the digital -- and especially mobile -- space in the coming months.

Related Stories:

• iPhone Updates: Missing Manual Already #2; More Book Apps Hit iTunes
• O'Reilly Ebooks: 130 Top Titles Now Available, Plus an iPhone App and Head First PDFs
• Experimental O'Reilly Ebook iPhone Integration with Stanza
• Open Question: Standalone iPhone Ebooks vs. E-Readers