Nate Hoffelder

It’s common knowledge that there are companies that will help you buy your way on to the NYTimes best-seller list, and that there are smaller illicit coops with similar goals. Heck, a book doesn’t even have to exist to get on the NYTimes best-seller list, so best-seller lists are a bunch of marketing smoke and mirrors, right?

Actually, it’s worse than you think. It turns out that with a little work, the bar for making it on to one of Amazon’s best-seller lists is lower than you would think.

Writing over at Observer, Brent Underwood explains how he gamed the best-seller list. This marketing expert (that’s his day job, and not just a snark) says that he got a bogus book on to an Amazon best-seller list with only three sales

Last week, I put up a fake book on Amazon. I took a photo of my foot, uploaded to Amazon, and in a matter of hours, had achieved  “No. 1 Best Seller” status, complete with the orange banner and everything.

How many copies did I need to sell be able to call up my mother and celebrate my newfound authorial achievements? Three. Yes, a total of three copies to become a best-selling author. And I bought two of those copies myself!

He describes his accomplishment as revealing the scam behind the best-seller list, but the short and simpler explanation is that he found a sub-sub-category on Amazon’s site which wasn’t very popular and where few books were sold on any given day.

Underwood listed his book in the category "freemasonry", arranged for a friends to buy it, and voila, he was (briefly) a best-selling author.

Shocking, isn’t it?

No, not really.

Amazon has over 500 categories for its bookstore, and some of them simply aren’t very popular with readers.

To name one example, a couple years back Mein Kampf caused a chorus of laments and hand-wringing after news broke that it was a digital best-seller in its categories:

The trend was spotted by author Chris Faraone, with 99p and 99-cent digital versions of the book riding high on both the Amazon and iTunes charts on both sides of the Atlantic. In the UK, Mein Kampf tops the "Political Science and Ideology" chart, as well as the "Ideologies" chart and, somewhat unsurprisingly, the "Fascism and Nazism" chart.

That story got huge press coverage, and dozens of sites covered it, but they were really making a mountain out of a molehill.

David Gaughran dug into the data, and he found that, before the news broke, this copy of Mein Kampf was selling fewer than a dozen copies a day:

This particular edition of Mein Kampf wasn’t selling at all until October 2013, when the publisher dropped the price to 99c – which is hardly surprising given the number of competing editions out there, many of which are available for free.

It then settled into a range of #7,825 to #9,995 on the Amazon rankings where it stayed until this story broke.

For those not familiar with the Amazon rankings, this equates to just 10 copies being sold a day – not a bestseller by any stretch of the imagination.

So yes, Underwood was right. You can get on an Amazon best-seller list with only a handful of sales.

But given that the best-seller lists have always been suspect, that should not come as a surprise. Underwood may rant about how it was harder to get on the list in the old days, but the fact is there have long been companies that promised to buy your way onto a best-seller list.

People have been gaming the best-seller lists for years (one, two, three, four, five, six). The earliest example I found dates back to 1969, when Paramount decided that the book which inspired their next blockbuster had to be a best-seller.

So Mr. Rehme, by his own recollection, did what any really enterprising publicity executive of the era would have done: he set out to rig the game.

Speaking by telephone this month, Mr. Rehme recalled sending members of the Paramount office staff to buy boxes of books from stores that, by his information, were being monitored by The New York Times in compiling its best-seller list. (These days, a dagger symbol next to a book on the best-seller list indicates that booksellers have noted bulk sales.)

“It worked,” maintains Mr. Rehme, who then circulated all those books to people in the news media and others, pumping up interest in a story Paramount was promoting as “a brand new brand of American frontier story.”

Really, the only thing that has changed in the past fifty years is the scale of the operation. What used to require a major budget can now be accomplished with a shoe-string budget.

This has brought true equality to publishing, making it possible for everyone to pull off the same hoax. And while I can see how that would piss off an old-school marketer like Underwood, I am less bothered because I can see that the best-seller list was and is a con.

The best-seller list has always been suspect, and no amount of ranting about the good old days is going to change that fact.

images by gisele13, Sangre-La.com

Kobo sent out an email today to KWL users, inviting them to fill out a survey and explain what features they want:

Hi,

You indicated interest in our Print-on-Demand service. We’re still in development, but we’d like to know what you want to see in a POD platform.

Please take a moment to answer this short survey. Your feedback will help us shape this service to your needs. You will also have the option to opt into our beta test to try out this new service before launch.

Click here to take the survey.

The survey asks about optional layout, design, and distribution services, and format (paperback vs hardback), before going into the nitty-gritty details about an author’s book.

This is far more than simply a query about whether authors want this service; Kobo wants to know specific technical details about the books an author is distributing via POD. Some of the options for describing your PDF file are so arcane that you’d have to be an Adobe Acrobat expert to know what they mean.

If you have any POD books, you should fill out this survey. It will give Kobo a better understanding if the market, and that should help other authors.

O O O

Today’s survey is the latest stage in Kobo’s long-running plans to expand beyond ebook retail. Around six months ago Kobo announced plans to add new services to its Kobo Writing Life publishing portal. So far they’ve added a discount on audiobook production and a (worthless) discount on ISBN purchases, and soon they could expand into POD services.

Kobo wants to turn KWL into a comprehensive services platform like eBookBaby, Fastpencil (which just launched a Fastpencil for Libraries service), BlblioCrunch, etc, but given how quiet that part of the publishing industry has been of late I am not sure there’s demand for a new competitor.

Do you think there is room, much less a need for another comprehensive portal in the ebook market?

image by welcometoalville

We’ve known since 2013 that Amazon has their eye on maybe one day letting Kindle users resell an ebook they bought, and it turns out their interest has gone international.

I’ve just learned that Amazon is also pursuing a patent in Canada on "Referring, Lending, and Reselling of Digital Items". The patent hasn’t been awarded yet, but according to the paperwork Amazon originally filed the patent way back in 2011, and has spent the intervening years filing paperwork, tussling with patent examiners, and paying additional fees.

The patent closely mirrors the US patent I wrote about in 2013. Both patents cover the sale and/or loan of used ebooks and other digital content, and they also include a method for the rights holder to be paid for that resale or loan.

It’s pretty straightforward, and essentially works like the same as a used print book sale (why it qualifies for a patent, I can’t tell you). The person selling the ebook lists it on Amazon, and when a buyer selects it the seller loses access and the license is transferred to the buyer. The seller receives a portion of the payment, Amazon gets a cut, and there’s an option for the rights holder to also get a cut.

Aside from the fact that Amazon is transferring a license, and not actually letting you sell an ebook, this is the same process as reselling a paper book.

There’s also mentions in the patent that the rights holder can be paid when an ebook is loaned by one Kindle user to another, and that the rights holder will have the option of allowing/forbidding the lending or resale of their ebooks.

This last comes as no surprise; authors have had the option to disallow loans ever since the lending feature launched in early 2011.

The patents don’t offer any hints as to when Amazon plans to put this system into place, but the fact that Amazon is still pursuing the Canadian patent suggests that they are still interested in the idea.

O O O

Coincidentally, I learned of this patent from another site which laughably proclaimed that Amazon was "secretly developing a used ebook marketplace". Given that we knew of the earlier patent, I don’t see how their interest was much of a secret. Also, Amazon revealed all the important details when they filed this patent’s description in 2012, so really the patent was only a secret because no one had found it yet.

And most importantly, I can’t see any evidence that Amazon has done more than file patents. That claim is really nothing more than clickbait, so I won’t reward the clickbaiters by linking to them.

image by Dear, max

Fresh from pulling bits of Scribd from its teeth, Amazon launched Kindle Unlimited in China on Tuesday.

According to local press reports, the service costs 12 yuan a month ($1.84) and offers access to 44,000 Chinese-language titles (including 3,500 titles translated from English). The ebooks can be read in the Kindle apps for iOS and Android, or on the Kindle.

That’s a far smaller catalog than the million-plus titles offered in the US, Canada, and Europe, and the paucity is likely due to newly imposed Chinese gov’t regulations that prevent foreign media (publishers and authors in the US, for example) from publishing online in mainland China.

The larger Kindle Store appears to be under the same restriction. It launched over three years ago, and yet a quick check today showed that it only stocked around 300,000 titles, and not the millions found in other branches of the Kindle Store.

There’s no word on how many Kindle customers Amazon has in China, although there is one report that Amazon "saw the number of active paid readers per month shoot up about 37 times by the end of 2015" (but 37 times what, now that is what we want to know).

That growth comes something of a surprise give the reports that the Chinese don’t read very many books:

According to a survey result published by the Chinese Academy of Press and Publication in April, Chinese people read 4.39 books per capita in the past year, a figure that trails far behind major developed countries; for example, the average American read 7, the average French and Japanese person 8.4, and the average South Korean 11. And, on average, Chinese people allocated just over 15 minutes a day to reading, compared to almost 100 to watching television and over 45 for using the Internet. While parents duly chant the old Chinese adage "a book holds a house of gold" to their children, the financial value Chinese consumers place on books doesn’t reflect the same conviction; according to the survey, the average price a Chinese person is willing to pay for a 200-page paperback is 13.67 RMB, just slightly over two dollars. That is half the price of a cup of an iced latte at Starbucks, or one-third the average price of a movie ticket.

This could explain why Chinese book publishers see book sales as merely a stepping stones. Zou Jihua, the director of digital media at China South Booky Culture Media Co, sees distributing to the Kindle Store more as a way of marketing books so he can sell the ancillary rights rather than as a way of making big money by selling ebooks.

"As long as the books gets well-known in China, you can make money in different ways, such as making movies or TV dramas," he told China Daily.

That is born out by the polling stats, although of course there’s no way for us to tell whether the stats are accurate.

China Email, Shanghai Daily

image by ginnerobot

A new startup is currently developing a new platform where users will be able to read for free in exchange for viewing adverts.

Dubbed Eleven, the service will be launching into beta later this year, starting with Android. It’s going to feature ads inserted at chapter breaks, and will use the funds to pay authors.

Edit: this service is now called Inara, and it is going to launch in September 2017.

According to Eleven co-founder and CEO Glenn A McCreedy, Eleven’s "Story Driven Advertising system uses proprietary algorithms to contextually match the ads to the ebook story and the reader profile" while still preserving the reading experience. He told me by email that Eleven is "ramping up for a crowdfunding campaign to start in the March/April timeframe", and in the mean time authors and readers are invited to sign up to be notified of the launch.

You can see one of the ad concepts at right.

Many details are still up in the air at this time, but I can add that rather than a completely free service, Eleven will offer three service tiers: Free, Gold, and Writer.

The Free tier will be ad-subsidized (and the writer tier is aimed at authors), but at the Gold tier "users pay a small monthly subscription fee to have access to an even larger library of books, with fewer ads AND the private buyers club where they can buy the newest titles with no ads available for a lower price than anywhere else online".

It sounds like Eleven is hedging its bets, and given the history of ads in books they would be wise to do so. Ads in books are not a new idea; they’re not even a new idea when it comes to ebooks, and their checkered casts a dark shadow over Eleven’s future.

The ad-subsidized ebook model has been tried several times over the past decade, and so far none of the efforts can be called a roaring success.

There’s Readfy, a German startup which is letting users read for free from a catalog of some 50,000 (German-language) titles in exchange for viewing adverts. It’s too early to call Readfy a success, but it is at least making enough progress to merit a new funding round last month.

Bookboon is a publisher that started with a model similar to Readfy. You could download one of their ebooks as a PDF for free, so long as you did not mind the advert on every other page.

The publisher touted some success with this model (55 million downloads in 2013), but ads alone apparently weren’t enough to sustain the company. It later expanded into selling the ebooks outright and charging $4 a month for access to its catalog (Bookboon Premium).

And then there is Wowio, a startup which tried the ad-subsidized ebook idea twice. The first time around it offered Bookboon-like free downloads, and then in 2014 when it announced plans for Readfy-like free access to a catalog of ebooks.

It’s hard to say whether either model worked out for Wowio, although it did boast of paying half a million dollars in royalties in the 4th quarter of 2007. In fact, it’s hard to say anything about the company given that it vanished into the ether some time last year, but I think it’s worth noting that its biggest success was a time before ebook sales had really taken off. Consumers may have lost interest once the Kindle Store became popular.

(Attempts to contact Wowio and its founder failed.)

All in all, perhaps the only successful example of ad-subsidized ebooks would be Amazon, which is using adverts to subsidize the cost of Kindle ereaders and Fire tablets.

That’s not a ringing endorsement for the practice of subsiding the price of the  content, however, and the history of adverts in print books raises similar doubts.

Any discussion of ads in ebooks will inevitably lead to mentions of the historical presence of ads in print books. Examples date back as far as the 1850s, but the practice reached its peak  in the US in the 1960s and 1970s when book publishers realized there was an opprotunity:

The story of paperback advertising started innocently enough: with babies, in fact. In 1958, the Madison Avenue adman Roy Benjamin founded the Quality Book Group, a consortium of the paperback industry heavyweights Bantam Books, Pocket Books and the New American Library. Despite the lofty name, the group’s real purpose was to sell advertisements in paperbacks, and its first target was the biggest success of them all: Dr. Benjamin Spock’s “Common Sense Book of Baby and Child Care.” A 1959 Pocket Books print run of 500,000 included advertisements by Q-Tips, Carnation and Procter & Gamble. By 1963, a 26-page insert in Spock was commanding $6,500 to $7,500 per page, and ads were spreading into mysteries and other pulps as well.

The ads were popular with everyone but authors, who didn’t appreciate being used to pitch tobacco products:

Publishers, on the other hand, were more than happy to take blood money from tobacco companies and put their ads in books taught in schools. Toni Morrison’s novel The Bluest Eye, for example, sported adverts from Lorillard Tobacco Company.

Another notable example was Dr Benjamin Spock, who sued S&S in 1973 for putting ads in his Common Sense Book of Baby and Child Care. According to the NYTimes, Spock lost his suit, and the practice continued until The Authors Guild reportedly banned unauthorized ads in its model contract.

Ads in print books has been tried at least once since then, but for all intents and purposes the practice has been relegated to the scrap heap.

However, that detail is less important to today’s news than the fact that ads in print books did not result in free print books. Sure, the publisher gained additional revenue, but the books weren’t free to the consumer because, according to my sources, the ads just didn’t generate that much revenue for the publisher.

And that brings us to a fundamental problem with any platform funded by adverts. Digital ads pay far less than print ads, so if the revenues from ads in print books were disappointing then the ads in ebooks will generate anemic revenues – at best.

Will Eleven succeed where others failed, do you think?

image by Andrew Mason

Bonnier is now inviting readers in Sweden to sign up for its ebook subscription service, Bookbeat.

Announced in October 2015, Bookbeat offers Swedish readers access to a catalog of ebooks and audiobooks for 169 krona (about $20 USD) per month, with the first month free. The catalog is drawn primarily  (entirely?) from Bonnier’s catalog, but also includes international best-sellers such as a translated  version of Stephen King’s The Shining.

The ebooks and audiobooks can be consumed in Bookbeat’s app for iPad and iPhone.

Edit: Or the Android app (this did not show up in my initial search, but Niclas Sandin pointed me to it. Thanks, Niclas!)

According to Bookbeat’s job listings, they’re also planning an Android app but it is still under development. And for that matter, the iPad app is also a work in progress. As you can see from the following screenshot, it has an orientation problem:

And yes, the app is in Swedish, but that was to be expected from the price, the pitch email I received, and the official announcement from October, which said that the ebooks would mostly be in Swedish.

Today’s launch comes in the wake of Scribd’s announcement that it was scaling back its "unlimited" ebook service, and limiting its subscribers to only three ebooks and one audiobook per month. Some might think that the smarter move would be to shut down Bookbeat, but Bonnier sees things differently.

Bookbeat CEO Niclas Sandin thinks there’s room for expansion in the Swedish ebook market. "Bonnier has seen how the market for digital books has grown," he said. "Our primary target group are those who haven’t yet read an e-book or listened to an audiobook, or that they don’t have the time to read."

As a wholly owned subsidiary of Sweden’s largest publisher, Bookbeat does have an advantage over Scribd.Its parent company has no interest in bleeding it dry. On the other hand, there’s also no guarantee that Bonnier will keep Bookbeat operational if it proves to hurt Bonnier’s other operations.

We’ve seen a similar situation with Hulu, and the tv networks and cable companies that own it. That service never lived up to its potential because its owners wouldn’t let it disrupt their existing business.

Will Bonnier make the same decision?

I don’t know, but it is worth watching.

Bookbeat

When I reported on Scribd reining in the unlimited aspect of its ebook subscription service yesterday, I suggested that Amazon’s next focus would be on education.

While that may conjure thoughts of Amazon subsidiary TenMarks, Kindle Textbook Creator, or Whispercast (Amazon’s platform for managing content/hardware in schools), I had something else in mind.

Earlier this week EdWeek reported on a new website from Amazon which will let educators share curricula with other teachers:

Amazon Education is working on a new platform that will allow schools to upload, manage, share, and discover open education resources from a home page that in some ways resembles the one shoppers are accustomed to accessing on the massive online retailer’s website.

School administrators learned about the site, to be called Amazon Inspire, during a “Transitioning to OER” session Friday as part of the National Conference on Education of the AASA, the School Superintendents Association, held here.

The new platform is in beta testing now, and is scheduled to be released publicly within the next two to three months, according to Andrew Joseph, vice president of strategic relations for Amazon Education.

…

Asked by one superintendent about the company’s financial interest in the effort, Joseph said, “Amazon is a big commercial entity and we have to make this sustainable over time. This piece we have committed to making absolutely free forever. We’re not going to lock the content up. We promised we won’t put a pay wall in front of it.”

While Joseph said the company has not decided exactly how it will achieve financial sustainability for Amazon Inspire, he said it could be in connecting users to books they might want to buy to go with a unit on Shakespeare, for instance, or in using Amazon’s capabilities in self-publishing books. “We don’t know exactly what it looks like … but we believe we have all these other paths down the road,” he said.

Most news coverage of digital textbooks is focused on publishers and tech companies, so it is easy to forget that a lot of curricula is developed by teachers for their own use. Ranging from worksheets to lecture notes to study guides, this content is rarely shared more broadly than on the department level (or, in rare cases, across a school district).

Amazon wants to change that.

We don’t know how this site will integrate with Kindle Textbook Creator, Amazon’s textbook-making tool.

Edit: Audrey Watters has posted a longer list of what we don’t know, and it’s worth repeating:

The platform’s in beta, and we know its name – Amazon Inspire – but little more. We don’t know what the business model will be. (Neither does Amazon, by EdWeek’s account, although Amazon Education’s vice president of strategic relations Andrew Joseph promises it’ll always be free. Mmmhmmm.) We don’t know what the interface will look like or how usable it will actually be (and I think those who’ve used Amazon Fire will concur: the company does not excel at UX. It’s also failed repeatedly when it comes to accessibility issues). We don’t know what format the OER will be available in (for composing, publishing, or remixing). We don’t know if content will be interoperable – that is, usable beyond the Amazon (Kindle) ecosystem – or if there’ll be integration with other software systems. We don’t know what data Amazon will glean from the resources posted there – it does say that materials will be tagged with Learning Registry metadata – and we don’t know what Amazon will do with that data. We don’t know how the licensing will work.

All we know is that EdWeek Amazon Inspire will let educators self-publish material they have developed, curate open resources, add ratings and reviews, and receive recommendations based on their previous selections.

Ideally this will save teachers both time and money. They won’t have to develop curricula on their own, and they won’t have to buy so much from educational companies.

This is not the first site to act as a repository for OER; California has a state-wide repository, and OERCommons.org is very similar in concept to Amazon Inspire. (And a lot of universities have their own institutional repositories, although those are considerably less open than Amazon Inspire.)

But one librarian I spoke to told me that Amazon Inspire seemed broader in scope than sharing sites she had seen, and that’s not the only difference.

Since Amazon Inspire is owned by Amazon, it is going to get a lot of press coverage when it launches. More attention equals more users, and that will result in more curricula being shared between educators and more money being saved for other uses.

Frankly, this is what Apple should have launched alongside iBooks Author. Amazon Inspire is going to be the disruptive innovation that Apple could have used as a way to save schools money on textbooks (which could then be spent on iPads – what Apple really wanted).

But hey, better four years late than never.

image by blair_25

In late 2013 two upstart ebook companies launched subscription ebook services that were variously described as a challenge to Amazon, a promising rival to Amazon/Apple, and making "Amazon’s model of selling individual books in an online shop look old". Scribd and Oyster charged $9 and $10, respectively, to let you read as many ebook as you like (Scribd later added comics and audiobooks).

Twenty-nine months later, and one of those companies has sold out to Google and shut down. The other gutted its service today.

Scribd announced on Tuesday that it is killing its unlimited subscription ebook service. As of some time in mid-March, readers will no longer be able to read all the ebooks they want. Instead, they will be issued credits each month for three ebooks and one audiobook of their choice from Scribd’s catalog of best-sellers. Unused credits will roll over to the next month.

The service will still cost $9 a month, and will include access to a nebulous "rotating collection of books and audiobooks handpicked by Scribd editors".

Scribd is spinning the news by explaining that the change will only affect a small group of subscribers ("3% in any given month"), but the fact remains that Scribd gutted its service today.

Is anyone else surprised that it took two years for this house of cards to come crashing down?

I am. Oh, I wasn’t surprised that the ebook buffet was closing; I’m just surprised that it took this long.

As many pundits have already explained, both Scribd and Oyster launched their services based on a fundamentally flawed business model. On the one side the companies were being paid a flat monthly fee by each subscriber, but on the other side the companies were paying their suppliers (authors and publishers) the wholesale price for each book read by a subscriber.

In other words, Scribd’s and Oyster’s revenues were finite and their expenses only limited by the the gluttony of their customers. And to make matters worse, Scribd et al were paying when a reader crossed a relatively low threshold (10%, according to Smashwords).

This wasn’t a business model so much as it was a recipe for disaster, and it lead Scribd to first cull romance titles (including Harlequin) and then dial down its audiobooks offering.

And now Scribd is effectively chucking the model.

This does not foretell the doom of subscription ebooks, of course. Even though it faces an uncertain future, Kindle Unlimited is still chugging along, and it paid out at least $133.6 million last year to authors and publishers under a per-page-read model (and that doesn’t even count the publishers getting the special payment terms).

And let’s not forget Safari Books Online (and similar services in the library market), which has been around for over a decade and yet shows no sign of stumbling, or Disney’s service.

So no, subscription ebooks aren’t completely dead, but the bubble has burst. The market has shaken out, leaving Kindle Unlimited and a bunch of small fry (Epic, Sesame Street, etc) and putting Amazon in a clearly dominant position in yet another digital market (along with trade ebooks, audiobooks, and digital comics).

P.S. Any guesses where Amazon will next strike gold? I’m thinking education, followed by library ebooks.

Scribd

image by docoverachiever

On Tuesday Boersenverein published new estimates for the German ebook market. According to surveys conducted by GfK, an estimated 3.9 million people bought ebooks in Germany last year, or about 5.7% of Germany’s total population aged 10 years and up. Fiction made up the largest share of purchases (86%), followed by non-fiction (5%), and guides (5%).

Roughly the same number of people bought ebooks in Germany in 2015 as in 2014, which is  a problem because GfK has also reported that they aren’t buying a whole lot more ebooks than before.

According to GfK, ebooks made up 4.5% of total book purchases in Germany last year, up from 4.3% in 2014 (and 3.9% in 2013).

That’s frustrating news for any author or publisher hoping to reach digital readers in Germany, but it’s not entirely unexpected. Past survey reports from GfK have suggested that the German ebook market grew quickly in the first half of 2015, before slowing in the second half. For example, ebooks made up an estimated 5.6% of the German ebook market in the period ending June 2015, up from 4.9% in the first half of 2014.

That is a far higher growth rate than GfK is reporting for the year, and if that trend continues we could see a spurt of growth in the first half of 2016, but it is just as likely that the slowdown from the second half of the year will stick around.

On the other hand, this report from Boersenverein is missing several important details. For example, we don’t know how many paper books were bought in Germany in 2015. Did the print book market surge past the ebook market, or did the paper book market contract?

Without that context, we can’t tell whether the German ebook market is growing or not.

Really, the only clue we can use to tell the health of the market is the 3.9 million German ebook buyers. And even that is only marginally useful; it doesn’t tell us how many Germans are _reading_ ebooks.

A grand total of 25,000 German consumers were surveyed for the most recent GfK report. They were chosen as a representative sample of the German population aged ten years and up (a total of 67.7 million people).

Boersenverein via Self Publisher Bibel

image by LIS-Corner 2009

Amazon delivered the first blow in a one-two punch on the future of subscription ebooks on Monday. (The second blow is coming Tuesday.)

Amazon announced on Monday that the retroactive funding pool for Kindle Unlimited totaled $15 million for January 2016, up from $13.5 million in December and almost double the $8.5 million paid out in January 2015.

More people than ever are using the service, which helps explain why the KENP per-page rate dropped to $0.00411 per page in the United States last month, down 11% from the December 2015 rate. That’s a huge change for just one month.

This is both the largest funding pool, and the lowest per-page rate, since Amazon switched to the new plan in July 2015, and while the news is disappointing it still makes a lot of sense.

Amazon sold a "record" number of Fire tablets and other devices this holiday season, and all those devices came bundled with a free trial month of Kindle Unlimited. The retailer also bundled Kindle Unlimited subscriptions during a few of their promotions, and discounted it a couple times last fall.

And with more reading devices activated on Christmas day than any other day of the year, it would make sense that KU usage would reach a new high in January (this is also why there is usually a post-Christmas surge in ebook sales).

While the per-page rate has dropped ever since Amazon switched over to the new system in July, there could be a light around the corner. Remember, Amazon is shaking up the way Kindle Unlimited works starting next month, when they switch over to the new KENP 2.0. The new system counts page sizes a different way. Some authors have reported that the page counts for their books went up, while others reported a drop.

We’re still waiting to see whether authors will come out ahead, obviously, but if the per-page rate drops too much then authors and publishers will need to ask themselves if they can do better outside of Kindle Unlimited than they can inside.

That is not an easy question to answer, and the answer will vary from one publisher/author to the next and even from one title to the next. And while each borrow page read in Kindle Unlimited does count towards a title’s rank in the Kindle Store (thus boosting sales indirectly), publishers and authors should always ask whether they can make more by adopting a wider strategy and selling in other ebookstores.

And after tomorrow’s news, authors and publishers are going to have to ask themselves whether the whole idea of subscription ebooks has a future at all.

P.S. Here are the pages read payouts for a handful of countries:

• United States: $0.00411 per page (USD). That’s a drop of 11% from December’s payment of $0.00461.
• United Kingdom: £0.00262 per page (GBP). That’s also a drop of 14% from December’s £0.00306.
• Canada: $0.00476 per page (CAD).
• Spain: €0.00408 per page (Euro).
• India: ?0.1008 per page (INR). That’s nearly identical to December.

P.P.S. Here’s a list of the monthly funding pools.

• May 2014: $1.2 million
• June 2014: $1.2 million
• July: $2.5 million (Kindle Unlimited launches early in the month)
• August: $4.7 million
• September: $5 million
• October: $5.5 million
• November 2014: $6.5 million
• December 2014: $7.25 million
• January 2015 – $8.5 million
• February 2015: $8 million
• March 2015: $9.3 million
• April 2015: $9.8 million
• May 2015: $10.8 million
• June 2015: $11.3 million
• July 2015: $11.5 million
• August 2015: $11.8 million
• September 2015: $12 million
• October 2015: $12.4 million
• November 2015: $12.7 million
• December 2015: $13.5 million
• January 2016: $15 million

Chris McMullen

images by Elsie, Jorge Franganillo

On Wednesday the UK’s leading literacy non-profit released the results of a survey of UK parents. Some 1,500 parents were polled last summer about what they thought their kids' reading preferences were, and the results were released this week.

You can find press coverage at The Guardian and The Bookseller, and the report itself can be downloaded from the BookTrust’s website.

At 72 pages long, it’s rather dense and I am inf act still reading it myself.  I don’t think it can be summarized in a single blog post (The Bookseller tried, and flubbed the headline). So here are a few of the highlights:

• Most parents have concerns over children using interactive e-books, with only 8% having no concerns. Concerns include that interactive ebooks will:
  • increase children’s screen time (45%),
  • mean they lose interest in print books (35%), expose them to inappropriate content (31%) or too much advertising (27%),
  • affect a child’s attention span (26%),
  • reduce parents’ ability to monitor what children look at (22%) or result in children purchasing add-ons without parents’ knowledge (21%),
  • inhibit learning (14%),
  • harm a child’s brain (10%).
• Parents want advice about interactive e-books. Almost half of parents would like more advice regarding interactive e-books with 62% of these parents wanting advice concerning how they can be harnessed to support their child’s learning and 58% wanting advice about how they can be used to entertain their child.
• Print books are the preferred reading format for children. There is a strong preference for print books for reading for pleasure (76%) and educational reading (69%) over interactive e-books (30% reading for pleasure and 34% educational reading) or simple e-books (15% reading for pleasure and 15% educational reading).
• Even highly digitised households use print books for children’s reading. Although 92% of parents and 73% of children were said to be confident users of technology, only 19% of children use an e-reader daily and 57% never use one despite having one in the home.
• Half of parents said their children read alone for pleasure. 51% of parents report that their child reads print books alone every day or almost every day, with only 7% reading interactive e-books and 5% reading simple ebooks alone every day or almost every day.

When you read this survey, or the news coverage, it’s worth remembering that this was a survey of some 1,511 parents in the UK, who were asked a total of 38 questions about their kids.

In other words, any factoid pulled from this survey report should be assumed to read "Parents said …", even when it’s not explicitly stated.

That distinction is important because, as Carrie Morgan points out on Twitter, there’s a huge difference between what parents think their kids like and what the kids actually like. This report tracks the former, but will likely be misreported as the latter.

image by davidmulder61

Rakuten released its annual financial report on Friday. While the news was generally good, the report also revealed embarrassing details about Rakuten’s ebook ventures.

Overall company revenues rose by 19% to 713 billion JPY for the year. Quarterly revenues were also up 14%, to 198 billion JPY, while net profit for the year slipped 38% to 44.3 billion JPY.

eBooks were hardly mentioned at all. There were a couple mentions of OverDrive, which Rakuten acquired in March 2015 for $410 million, yes. It’s library loans were up 23.5% YoY in the fourth quarter, and Rakuten indicated in its "Vision 2020" brief is that the combined EBITA for Kobo+OverDrive will be positive in 2016. That is a first for Kobo, which has stayed a money pit even two years after Rakuten put a fixer in charge of the ebook company.

The single most important mention of Kobo was in a related document where Rakuten explained the write offs it is taking this year on several of its subsidiaries.

The Japanese retail conglomerate announced a 7.8 billion JPY goodwill impairment on Kobo.

According to Wikipedia, in this situation goodwill is an accounting term for a certain type of intangible asset:

Goodwill represents assets that are not separately identifiable. … Examples of identifiable assets that are not goodwill include a company’s brand name, customer relationships, artistic intangible assets, and any patents or proprietary technology. The goodwill amounts to the excess of the "purchase consideration" (the money paid to purchase the asset or business) over the total value of the assets and liabilities.

Shane Leonard, CFA and CEO  of Stockflare.com, has a simpler explanation. Over on Quora this certified accountant explains that "goodwill" is used to describe the difference between the amount paid to buy a company and what its assets are really worth. (Several other accountants chimed in with similar explanations.)

Basically, if company A pays $200 million to buy company B, and company B has assets which are worth $100 million, then company A lists the difference between the actual value of company B and the purchase price as goodwill.

It is, as a reader pointed out, a concept that was invented by the Ministry of Accounting in Orwell’s 1984.

And when a company decided to take that goodwill as a loss, it is called a goodwill impairment.

In this case, the Kobo write off is worth about $69 million, or about a fifth of the $315 million Rakuten paid for Kobo in 2011. You could frame this as Rakuten conceding that they overpaid for Kobo way back when, but that’s not quite true.

At the end of 2014, Rakuten showed 20 billion JPY in goodwill on Kobo, but that was cut down to 10 billion JPY in goodwill at the end of 2015 (after which Rakuten took the goodwill impairment).

And at the end of 2012, Rakuten was listing 16.8 billion JPY in goodwill on Kobo, meaning that Rakuten overpaid by about $149 million when it bought Kobo in 2011 for $315 million.

That’s pretty bad, but the situation with OverDrive is actually worse.

According to Rakuten’s own documents, they’re currently carrying 37.6 billion JPY in goodwill on OverDrive. That comes to about $333 million, on a company that was acquired for $410 million.

Yes, Rakuten paid about five times what OverDrive’s assets were worth when they bought the company last year.

There’s no way for outsiders to tell why that happened, but do you suppose they had to outbid Amazon?

P.S. TechCrunch reported on this story on Friday, but they accidentally swapped two of the figures and misreported the Kobo write off as 17.2 billion JPY. That is not correct. (They also neglected to explain the meaning and context of goodwill, and missed the detail about OverDrive.)

images by cogdogblog, galactic.supermarket,

GfK shared some new stats last week on French ebook consumption that have me scratching my head.

Citing Livres Hebdo, The Bookseller reported on Thursday that ebooks made up a tiny fraction of ebook sales in France last year:

Quoting figures compiled by market research firm GfK, e-book sales in France rose by a brisk 29% in unit numbers and 24% in value in 2015, trade magazine Livres Hebdo reported. This meant that sales totalled €79.1m for 10.7m files downloaded, said Sébastien Rouault, head of GfK’s book panel.

Nonetheless, despite the much stronger sales increase than reported for print versions last year, e-books still represented only 1.9% in value and 2.9% in volume of total book sales.

The Bookseller is saying that this was a sign of significant growth, but there’s a few huge problems with the data. The first is that both stories are paywalled, and the second is that there’s no public source for the statistics.

But the more important problem with the data is that it is radically different from the stats released by SNE, the French publishers trade group, for 2014.

Back in June 2015 I reported that ebooks made up 6.4% of French book sales in 2014:

Book sales in France totaled 2,652 million euros on 422 million units sold in 2014. That’s down 1.3% in value and 1.2% in volume compared to 2013, which is relatively good news considering that the music market dropped a reported 7%, and the video sales decreased by 10%.

…

The ebook market also grew in France in 2014; it now represents an estimated 6.4% of book sales in France, up from 4.1% in 2013. France’s ebook market totaled 161.4 million euros in 2014, up 53.3% from the previous year.

Did you notice the huge difference?

SNE said that the French ebook market was twice as large in 2014 as GfK said in 2015. It’s hard to say why they arrived at such different results, but I have a couple theories.

It’s possible either SNE or GfK pulled a Nielsen and misunderstood how much of the market they were tracking, but I think the more interesting possibility is that both are correct and that they are simply measuring different things.

GfK is a market research firm, and that frequently means consumer surveys. SNE, on the other hand, collected accounting data from French publishers.

If both sets of figures are valid then the difference between them reflects the ebooks that French publishers are selling to consumers outside of France.

The great thing about ebooks is that you don’t have to be limited to just a single national market; you can sell them to anyone who has an internet connection and a valid payment method anywhere in the world. South African authors could revive a moribund industry by, for example, targeting the US market.

And that is why I think we’re seeing the impact of international sales on French language  ebooks. Does anyone know if that is a valid conclusion?

Do you have any insights on the topic? The comments are open.

image by Kathleen Tyler Conklin

As a rule, Amazon tends not to update their older Kindle models. For example, the most recent Kindle firmware update (v5.7.2) was only made available for the 2013 Kindle Paperwhite and the more recently released Kindle Voyage and basic Kindle.

But now it appears Amazon is making an exception to this policy.

Several sources have reported that Amazon is sending out emails demanding that Kindle owners update their ereaders. The email includes instructions on how to download the update, as well as this ominous warning:

If you do not update the devices' software by March 22, 2016, you will no longer be able to access Kindle services or get the update via Wi-Fi or a wireless connection. To resume access, you will need to manually update the software on each of your Kindle devices. Please visit our Help page for more details on how to update automatically: www.amazon.com/ku2016

I have not received this email, but I’m told that Amazon is sending it to all Kindle owners, including people who own older Kindle models like the Kindle DX, original Kindle, and the Kindle Keyboard.

While that would appear to be a mistake, members of MobileRead have investigated and discovered that Amazon has released updates for the older Kindle models, including the original Kindle (which launched in November 2007).

The update for the original Kindle is only 12KB in size, and according to the techie who unpacked the update it only makes a small change to a single folder (/opt/usr/java/lib/security/cacerts).

Based on the context this is clearly a security update of some kind. It’s most likely one which affects how the Kindles communicate with Amazon’s servers.

So if you get a notice, you should update your Kindle immediately. (Better yet, why wait?)

P.S. Did you get the notice, and have you acted on it? (Not everyone has received it.)

image by Strupey

Do you like fancy ebooks? Then you should probably go somewhere other than the Kindle platform.

But if you like your Kindle ebooks to have basic web features like hyphenation and drop caps, I have some good news for you. On Monday Amazon released  a new beta version of Kindle Previewer, the app that many developers use to convert Epub to Kindle ebooks.

It’s available for OSX and Windows, and can be downloaded from Amazon.  This is a beta release and thus not for the faint of heart, but the changelog does give us at least one good reason to try it:

• Support for previewing books with Enhanced Typesetting and Bookerly
• New widget through which you can easily change the device type and orientation, navigate through the table of contents, and search within the book
• Simplified installer for Mac that does not require you to manually download and install Java and X11
• Full-page previews without having to scroll
• Ability to change the fonts during preview
• Separate navigation pane for quicker page navigation
• Faster text search, page navigation, and book re-open

Yes, the app will let you preview an ebook with the enhanced typography that Amazon added to the Kindle platform in may of last year.

It doesn’t say whether the app will let you _make_ the ebook with the enhanced typography, however.

Does anyone know if that works?

O O O

In related news, Amazon has also released a new version of the Kindle Publishing Guidelines (PDF). This document details all of the tools you can use to make Kindle ebooks. According to its changelog the new set of guidelines have been updated:

• Reorganized document.
• Updated 2.2.2 Kindle Previewer Software
• Added 2.2.3 Kindle Textbook Creator
• Added 2.2.4 Kindle Comic Creator
• Added 2.2.5 Kindle Kids’ Book Creator
• Added 3 Comparing Formats
• Updated 9.3 Text Guidelines
• Added 12 Creating Fixed-Format Books Without Pop-ups
• Added Appendix A Enhanced Typesetting

MobileRead, EpubSecrets

image by Steve Nagata