Three misperceptions about the ebook business

by Chris Walters of Booksprung

You can pretty much always find outspoken, passionate diatribes about ebooks online. I’ve written several myself, but in my defense I had to, or else the Ebook Bloggers Board would have flogged me and taken away my WordPress dashboard. Even setting aside my own involvement, I’ve always enjoyed this sort of spirited discussion–it’s like politics, only it doesn’t leave me feeling coated in a sludge of despair the way a political jeremiad does.

But there occasionally comes a tipping point. Sometimes I read too many pieces in the same week, or I wake up and, while browsing the morning links in bed, get stuck on a particularly over-the-top article or editorial or news item about ebooks and publishing*, and I snap. “What are these people thinking!” I yell at the cats. “And stop licking my neck! I’ll feed you in a moment!”

I’m going to put the subject of The Cat Nuisance aside and just focus on The Ebook Diatribe Nuisance right now. (Although really, not writing about cats is probably the second or third cardinal sin of the blogosphere–I’ll have to go hide my WordPress dashboard after I hit “publish.”)

Here are three common misperceptions that I think we’d all be better off discarding before writing anything else about ebook publishing.

Misperception #1

Pricing: Publishers don’t get it!

They get pricing; they just don’t always do what we’d like as consumers. When a publisher prices an ebook higher than Amazon’s suggested ceiling of $10, it’s trying to do any of several different things:

  • reduce demand for ebooks to help improve sales at physical bookstores, because that’s where the bulk of its business model exists;
  • prevent or slow the erosion in the consumer’s mind of what a new book should cost, so that the eventual switch to ebook dominance doesn’t also lead to an across-the-board drop in revenue;
  • wrest pricing control away from Amazon, a company known among publishers to be ruthless in its pricing and service demands.

Much has been made about that high-priced Ken Follet book, but as I suggested back in August, this is how it should work with ebooks. The price should be elastic, and publishers should be able to charge more early on in order to profit from consumers willing to pay a premium for earlier access. I wonder whether there’s a psychological barrier–specifically on the side of the publisher, but also with consumers–that makes it difficult to think of a book as having a fluctuating price, but that’s how it should be. You’ll notice that Amazon adjusts prices up and down for inventory throughout its website, fine-tuning the offer based on the consumer, competitors’ prices, and who knows what other secret variables.

What I do worry that many publishers still don’t get is that digital distribution of books will soon become a foundation of the publishing business model. Taking a protectionist stance on a pre-Internet business model may feel right today, but is likely to be a less profitable strategy in the near long-term (say, 4 to 10 years). I hope the smarter publishers are using pricing to buy themselves time to transform their business processes to be more efficient in the digital space. I don’t, however, know if any of them are actually doing this; sadly, they may just be under the impression that they can control the digital beast, despite compelling evidence in other industries that it’s truly disruptive.

Misperception #2

Ebooks could potentially ruin publishing

This is a ridiculous statement as I wrote it, but add one word to it–”ebooks could potentially ruin traditional publishing”–and it’s accurate. If your business is built around a printed book model, then there’s enough disruptive qualities to digital publishing that it could wreak havoc with your profits. Clearly that’s already happening with physical booksellers like Barnes & Noble and Borders, although I’m not sure any big publishing houses have really felt any significant pain from ebook sales so far.

The more important question, then–the one that might actually motivate those of us who aren’t part of the traditional publishing industry to care–is whether or not traditional publishing can do a better job of preserving and building a society’s culture than some still-evolving digital model that generates less friction with respect to geographic territories, distribution, and resource usage.

I think these two recent news item answer that question rather neatly:

“Amazon to sell short-form ‘Singles’ for Kindle” – Amazon plans to begin selling long-form articles and novellas as stand-alone pieces through its Kindle store.“Penguin to publish mini moderns” – Starting next February, Penguin will publish classic short stories, from authors like Dorothy Parker and Isak Dinesen, as stand-alone mini-books.

Amazon is creating a new market for original works that so far have failed to find an outlet in traditional publishing, mainly (probably only) because there is no feasible way to physically print, ship and stock a 20,000-word novella and actually make money off of it. Ostensibly, these will be both reprints (particularly with magazine articles, I suspect) and new works from living authors who are still writing.

By contrast, Penguin is pulling from its extensive vault of copyright-protected works that might have already been more widely read had they been in the public domain on Project Gutenberg or Feedbooks. Penguin hasn’t been able to find a way to monetize them, apparently. In the article I linked to above, a Penguin rep even says that the goal is to expose new readers to works that have languished under the current publishing model and that are being forgotten by modern readers.

So both announcements are purely about making money, but Amazon’s offering may actually enable new content to enter the marketplace, whereas Penguin has been prevented by its business model from sharing valuable existing cultural content with the world.

You can expand this to other forms of writing. How many terrific first novels were never sold in the past 50 years because there wasn’t a market for them? Theoretically, a behemoth online seller like Amazon or Barnes & Noble can find the 2,500 potential readers for a well-written but niche novel that’s distributed digitally; even better, that retailers can pass the bulk of the labor off to the writer (or whomever the writer hires) via self-publishing tools to minimize the initial investment. I suspect traditional publishers could take advantage of digital technology to publish in this way as well, but I also suspect they’re trapped in pre-digital ways of thinking and can’t conceive of how to profit from it.

Misperception #3

The customer value propositions bookstores offer include a sense of community and handpicked selections

I call these the “connection and curation” arguments, and they both make me cringe. These are not two of the strengths local bookstores can uniformly offer to communities, and focusing on them is a waste of time.

Let’s look at the human connection proposition first. As a human, my own experiences may be anecdotal but they’re relevant, since they neatly disprove the suggestion that a bookstore provides a basic human need. I have never made friends with a bookstore. I have never found new friends at a bookstore. I have never filled a pit of loneliness by “only connecting” in a bookstore. Once, back when I was about fourteen, a stranger grabbed my butt in a Waldenbooks at the mall, but I’m pretty sure that’s not what people are thinking about when they wax raphsodic about the human element of a local bookstore.

On the other hand, I am sure that there are people who are the exact opposite of me, who have ongoing friendships with employees or owners of local bookstores. But there are also people out there who become friends with their coworkers, or neighbors, or the young couple that opened the coffee shop a block away from Starbucks.

I know that the potential for human connection exists, in other words. I just don’t think that local bookstores can claim this as a unique value.

This is part of a larger sales strategy that isn’t discussed as much as I think it should be, so I’ll bring it up now: despite all advertising to the contrary, you can only make friends with certain animals and with other people, never with companies. Every time a business wants to make an emotional connection with an actual human being, it’s engaging in a sneaky, underhanded marketing tactic designed to sidestep your more rational marketplace behavior and get you to spend emotionally. Never trust a company that wants you to think of it as a friend, unless you know that if you were in a car accident and called that company for help, it would come to the hospital immediately. (What, you don’t have that company’s home phone number? Ah, see, that’s the rub.)

The curation argument is even easier to dispel. Simply put, if I had to choose my next book purchase based on either a single employee’s recommendation at a Barnes & Noble, or the results of an algorithm that has collected shopping data from thousands of consumers whose purchasing histories closely match mine, I’ll choose the algorithm. It’s just a numbers game to me; I think the algorithm will have a better predictive capability. James Surowiecki in The New Yorker this week says essentially the same thing when talking about the curation of movie titles:

Places like Netflix and Amazon have demonstrated the great irony that computer algorithms can provide a more personalized and engaging customer experience than many physical stores.

This doesn’t mean that I don’t like people or that I don’t value the personal recommendation. It just means that in the marketplace, I want to choose the more efficient mechanism to help me get the best value for my dollar. I can distinguish pretty easily between real human connections and data-mining tools, and I’d prefer the tool when I’m in the marketplace.

So what are the customer value propositions for local bookstores? Beats the hell out of me, but I’d suggested the following. Only the first two require a massive financial investment to implement, and honestly I wouldn’t be surprised if Amazon beat local booksellers to the punch regarding print-on-demand in the next decade.

  • immediate access to hundreds of thousands of printed books, particularly using print on demand technology;
  • custom books assembled from publishers’ content libraries, printed while you wait using print on demand technology;
  • communal spaces for humans to connect to other humans as equals, not in a customer/employee dynamic;
  • access to books that lose their essential qualities in digital form, such as photo books, coffee table books, poetry, gift books, graphic novels, pop-up and children’s books;
  • direct access to authors (originally I typed “face to face,” but I think improvements in communications technologies means it’s theoretically possible to pool resources and create virtual readings, signings, and Q&A sessions);
  • rare and collectible book services.

Those last two are all about scarcity, and they may be the only types of scarcity that ebook dominance can’t erode.

* Some recent examples: The otherwise awesome blog MobyLives from Melville House Publishing has declared all-out war on Amazon, and is habitually using blog posts as propaganda (see, for example, “spam commenting comes from Amazon!” and “barcode scanning is Amazon’s attempt to steal from bookstores!). The UK’s Publishers Association is growing obsessed with pre-digital territorial controls and how to enforce them on ebooks. Respected newspapers are deliberately conflating Amazon’s pricing policies with those of publishers and further confusing the general public. [return to post]

(Photo: Lars Plougmann)

7 thoughts on “Three misperceptions about the ebook business

  1. I couldn’t agree more with most of your arguments on pricing and the potential of e-publishing and print-on-demand, but on “connection and curation” I am not 100% with you. It is a mistake for someone to believe that an employee at a bookstore or, worse, the owner of the place is your friend and free of business interests, but, that apart, it is true that many times bookstore employees had made great recommendations for books. When humans are envolved, the advantage is that they can think outside the box, unlike even the most elaborated algorithm. My examples are from Greece, where buying books online or chatting on books in forums and blogs is not that widespread, but this is my personal experience.

    I have to admit though these excellent recommendations were in fact the exception and the vast majority of bookstores, local or not, can not really offer any sound advice, apart from locating in the shelves the book you were already looking for. And there is where machine and algorithm win, because most “real world” bookstores are not such a great experience as they say they are.

  2. If publishers actually showed themselves to be more willing to change their prices in internet time rather than in traditional publishing time, I wouldn’t find their pricing nearly so annoying. If I wanted to read Follet’s book and didn’t want to pay $20 for it, I’d put my name on the hold list at my library. When my name came up, I’d check the price; if it were down to a reasonable price, I’d buy it, but if (as I suspect) it’s still at $20, then they’ve lost a sale. This is exactly what I did with a mystery published by Penguin by an author much less well known than Follet, and Penguin lost a sale.

  3. It’s early in the ebook world and publishers are still trying to figure it out. eBooks have been a real factor for less than three years. Apple forces publishers to abide by Agency terms. Who knows if this is good or bad. Apple’s goal is to sell more iPads (not necessarily more ebooks).

    Amazon is willing to lose money on every ebook bestseller so it can corner the market (the Kindle being a closed system).

    The sales of Ken Follet’s $19.99 ebook don’t seem to have been hurt by the higher price. The boon us three times longer than a James Patterson novel. Shouldn’t it cost more?

    Sure consumers want the lowest price. Who doesn’t? But assuming all books should be the same price is not reality.

  4. As for the comparison of algorithm vs human opinion – I believe that the way the algorithm works hasn’t been sufficiently described. It doesn’t work in void – all it does it taking millions of human opinions, from book ratings and correlations between various books bought by the same customer, and averaging them. This allows for nuances of opinions common to many people to count more, and unique experiences skewing the rating to count less in the final suggestion. So it’s not comparing computer to human, it’s comparing millions of humans + statictical analysis to a single human.

  5. Regarding access to authors, I think you should have left the “face to face” part in there. Agents and publishers expect today’s authors to provide direct online access via FaceBook, Twitter, blogging, etc.; most agents and publishers won’t even consider a work from a new author who doesn’t already have an established “platform” (that’s what they call an online presence with a number of followers).

    I don’t know what a bookstore could offer to significantly enhance that online access.

    1. I was thinking along the lines of Margaret Atwood’s remote book signing experiments, as well as teleconferencing. These are potential avenues to explore regarding the problem of how you can manage to get an exclusive “appearance” (complete with signings, Q&A, and readings).

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