Nate Hoffelder

If you’ve been following digital publishing news over the past 6 months then you probably know that in late December French regulators expressed doubts that subscription ebook services were legal under France’s fixed price book laws. Those doubts solidified into a legal opinion in February 2015 when Laurence Engel, la Médiatrice du livre, ruled that all the existing services were illegal under the letter of the law.

Kindle Unlimited and its local competitors Izneo, Youscribe, and Youboox were given five months to bring their services into compliance with the legal decision. I don’t have news yet on Kindle Unlimited but I can report that Youboox, Izneo, and Youscribe are either now legal in France, or will be soon.

The three services had made proposals to Engel which were accepted, and they will be legal once they’ve changed their practices to match the proposals. They have six months to comply.

Izneo’s solution was relatively straightforward: they pulled any digital comic titles not published by MP Group ( about 1% of the 1,500 titles offered via subscription). This move made Izneo’s service legal by effectively granting the MP Group control. French law requires that the publisher control the price, and as the only publisher in that particular subscription service MP Group controls the price by default.

In related news, Izneo’s retail store boasts 12,000 digital comic titles from over 60 different publishers.

I’m having trouble parsing the details being discussed in the source articles on Youboox and Youscribe, but I can report that my source says both services are legal. Youboox affirms that it will continue to charge a flat 10 euro per month fee.

We are still waiting to learn the steps Amazon will take to make Kindle Unlimited legal in France, and the same goes for Scribd.

Stay tuned.

IDBoox, IDBoox, IDBoox

For reasons that escape me, the world’s largest military force is adopting Epub (as well as a proprietary format called E2Book).

This crossed my desk today:

The Army is pushing knowledge to the point of need by making e-Publications available for download to Soldiers’ mobile devices.

Doctrinal publications are accessible as Portable Document Formats (PDF) on personal computers and some mobile devices, but viewing them on mobile devices is less than optimal.

By the end of June, the Army will have converted many Army doctrinal publications to an EPUB format, making it easier to read on computer tablets and smart phones. Depending on the device’s sophistication, users can bookmark, highlight and insert notes on the publications.

The Army is in the process of converting their existing docs to Epub as well as to a rich ebook format I’ve never heard of before, E2Book.

It’s described as having videos, animations and other embedded multimedia, but from what I see online this looks to be just a variant of iBooks. I don’t have the specs so I can’t tell you if it is simply iBooks by another name (perhaps a subset of iBooks with a restricted feature set?), but the one I found to download is reportedly only compatible with the iBooks app.

While it’s all well and good that the Army is adopting a rich ebook format, I don’t see a reason to move to Epub.  I’ve found that nonfiction, particularly the dense and complex material that the Army publishes in its training docs, works best as a fixed layout format.

And since they’re already producing PDF, I don’t see a reason to replace them with Epub. Fixed layout Epub is significantly less useful and has fewer features than PDF, and it is also less widely supported.

But that hasn’t slowed adoption significantly in the civilian world, or apparently in the military.

Tradoc via Dvids

Over the weekend I explained how Amazon was using the payment terms in KDP Select to manipulate the supply of ebooks in Kindle Unlimited, and damned if they didn’t just do it again.

Amazon has just announced that starting 1 July, they will no longer be paying authors based on the number of times an ebook has been loaned and read in Kindle Unlimited. Instead, the new payment term will be based on the number of pages read.

Ever since KDP Select launched with the Kindle Owner’s Lending Library in late 2011, Amazon has counted the number of ebooks which were loaned and read and used that number to divvy up a pool of money. The pool started small, but it has since grown to exceed $10 million in May 2015, and is expected to pass $11 million in July 2015.

That $11 million is going to be divided based the number of pages read, and not the count of whole books.

• This means, for example, that longer ebooks are going to be worth more than shorter ebooks (assuming that they’re read cover to cover).
• It also means that quality matters more now; if a reader loses interest a third of the way in then the author will not be paid for the rest of the book.
• And last but not least, this change might make it worthwhile for authors to submit longer novels once again.

Amazon explained that they made this change in response to authors who had been telling Amazon that "paying the same for all books regardless of length may not provide a strong enough alignment between the interests of authors and readers".

That is true.

Hugh Howey is one of the authors who had been pushing for the new terms. He wrote today that the change is "one many of us have been clamoring for and even expecting." He added, "If anything, I’m surprised it took this long."

Later in his post he writes:

I have a feeling we’ll see some knee-jerk reactions from authors without considering these pros and cons. Shorter works still make a lot of sense in KU. It’s hard to justify selling short stories for more than a dollar, and you only make 35 cents on that dollar under KDP terms. In KU, a 20 page story might earn just as much as a sale. What we should celebrate is that short stories will no longer earn the same amount as a novel, especially since the 10% threshold was much easier to reach on a short story. That system just wasn’t fair. The new system is a vast improvement.

I agree.

As I explained over the weekend, the old payment terms had been encouraging authors to submit short works to KDP Select. A short ebook was worth the same as a long one, so authors were writing to suit the market.

And now they’re going to have to write to suit a different market. While it is too early to say how this will impact authors, I do think that readers will benefit. They’ll be able to enjoy longer stretches of stories without having to switch between one ebook and the next.

images by kodomut, seanmfreese

With Kindle Unlimited, Oyster, Scribd, Blloon, and other services toiling away, ebook subscription services are quite common today. However, Tom Kabinet has found a way to turn the model on its head.

Last week Tom Kabinet launched a new ebook service. I’m still not quite sure how to classify this service, but I did glean from the FAQ that readers can sign up to pay 4 euros per month to join a club of some kind.

According to the FAQ, readers are paying a monthly fee for the privilege of "donating" the ebooks they buy elsewhere so that Tom Kabinet can resell them to other paying members. And once a member reads an ebook, they can donate it to Tom Kabinet again. Each time a book is donated, the member who gives it away will get an extra week’s membership.

Yes, I do think that sounds odd, but the FAQ does match up with the report in Twinkle Magazine. The latter said that Tom Kabinet has links with several Dutch ebook retailers (Bol.com, Poeken.com, eBook.nl, Libris, and Kobo) which will enable its club members to access those stores and donate the purchased ebooks to Tom Kabinet.

This is very likely handled via LeesID, the non-profit cloud ebook service which launched in the Netherlands last September.

The ebooks are described as being DRM free, but that is probably not completely accurate. Due to Tom Kabinet’s legal troubles last year, the ebooks are probably marked with an otherwise imperceptible digital watermark. However, they won’t have encryption DRM like Adobe’s.

When you boil it down, it looks like Tom Kabinet has opened a membership-supported bookstore for used ebooks. That’s not quite what I was expecting when they announced plans for a subscription service earlier this year, but if we squint just right then we can see the resemblance.

And this certainly does fill Tom Kabinet’s needs for making sure that the ebooks it handles are legally purchased.

As you might recall from last year, Tom Kabinet initially launched as a used ebook marketplace in June 2014. After a series of legal battles,  that marketplace was ruled legal in the Netherlands with the caveat that Tom Kabinet is allowed to continue to operate so long as it makes sure that the ebooks it handles were legit (whether the service is legal in the EU is another matter) .

Tom Kabinet had to purge their marketplace in order to comply with that caveat, and the new model was likely designed around that legal requirement.

Of course, that does not mean that this service is legal or that publishers are going to be happy. But Tom Kabinet does have legal precedent on its side as well as a friendly court. So long as it has the funds to win court battles while still covering its operating costs this site will likely continue to function for the next several years.

TBH, I am unconvinced that this model will work. Are there enough ebook users in the Netherlands to support this club?

I don’t know. Sure, locally published ebooks are expensive, and that makes a membership worthwhile. But is it enough?

image by Paulo Marcel Coelho Aragão

When Ursula K Le Guin posted her Amazon rant a couple weeks ago she was roundly derided by the indie publishing community, but it turns out her arguments may have accidentally hit the mark.

Le Guin blamed Amazon for destroying for destroying the legacy publishing industry through over-commercialization, a hyper-focus on best sellers, and turning books into commodities.  Her arguments were false in that they ignore the historical facts that every complaint she made pointed to a trend which existed long before Amazon was even a gleam in Jeff Bezos' eye (*).

But even though Le Guin was generally wrong in every point she raised, her general argument was true to some degree for a small segment of the ebook market. Amazon is driving  a small part of the ebook market in a way that I’m not sure the larger industry has noticed.

I am referring to Kindle Unlimited, or rather KDP Select, the program which Amazon uses to recruit indie authors and publishers into Amazon’s subscription ebook service.

For those not familiar with its history, Amazon created KOLL in late 2011 and used KDP Select to supply the ebooks. They kept the funding high enough that authors would put their novels in, and not just short works. Also, they limited KOLL to a single title, thus making it important that an ebook was worth the rental.

And then Amazon launched KU, and by manipulating the monthly pool of funding they let the payment drop to the point that novels were no longer profitable. Amazon also let KU subscribers read as much as they want, thus encouraging snacking on short works.

As I have been reporting month after month, Amazon has been keeping the funding pool for KDP Select small enough that the payment for each ebook loan has stayed below $1.40 for most of the 11 months since KU launched(**).

As one author explained in a pair of comments over in the comment section for The Passive Voice, that low payment is driving authors to write short works which can be read quickly:

This is truly a new world. Short, episodic fiction will be available and it must be created at extremely high volume in order to stay profitable.

I don’t see how trad pub could even hope to compete. I’ve gotten to the point where if I don’t release a new “book” (and I use this term very loosely) every 3-5 days, I’m seeing a big drop off in my earnings.

In 2012, my idea of frequent releases was probably twice a month (and that was still way more than most authors were doing at the time). Now, twice a month is like a snails pace.

Kindle Unlimited’s impact first came to my attention last December when it was mentioned in the comment section of one of my posts about how "Kindle Unlimited is killing retail sales". That trend proved to be less of a trend than an annual cycle amplified by authors seeing their novels do poorly in KU, but in the ensuing debate one commenter raised the point that shorter works were doing better in KU than novels.

And here we are in June, where we find Hugh Howey chiming in, agreeing that he sees the same trend.

Think I haven’t noticed? 🙂 Check out what I’ve been releasing lately. Short stories. And I’ve got two other projects in the works tailor made for KU.

Lest you feel inclined to ignore this as not being part of the true book market, I would remind you that one, when it comes to ebooks length matters less as a distinction than it does in print (where it was primarily a commercial divisor, anyway); and two, these are book authors seeing a market opportunity in short works. Time spent writing those shorter works is time not spent writing novels.

Howey and the unnamed author see a gold rush opportunity in the $9.8 million (and growing) pool of money Amazon is using to fund KDP Select each month.

That is a small sum of money in terms of the entire ebook market, but it is also a section of the market that is both growing and still below the radar of some indie authors. (It is other things as well***.)

And so Le Guin was right to a limited degree.

Just so we’re clear, that pool of funding, KDP Select, and Kindle Unlimited are all the creations of Amazon. The retailer invented a market and continues to  manipulate it.

Amazon is driving part of the ebook market, but it is such a small segment that it raises the question of whether Le Guin was wrong on the larger point of Amazon’s power.

I leave that point up to the reader to decide.

***

P.S. Some of the trends Le Guin complained about, including the commercialization of book publishing, can actually be traced back to before Le Guin was born. See the use of serial fiction in the Victorian era, to name one example. That was less a storytelling device than a response to market conditions.

P.P.S. While we’re on the topics of loans in subscription ebook services, I’d like to point out that the AAP recently announced estimates for the US subscription ebook market for 2014. Those estimates are almost certainly wrong in that they missed most of the activity in Kindle Unlimited and Kindle Owner’s lending Library (I’m working on a post).

P.P.S. Kindle Unlimited is also going to prove a greater threat to magazines and anthologies as the number of short increase.

image by Patrick Feller

The Association of American Publishers (AAP) has just debuted a new annual estimate of the US book market.

StatShot Annual (not to be confused with the monthly StatShot report or the now retired BookStats program) is based on the reported annual revenues of some 1,800 US publishers. It shows that the total US book market (including  trade and other segments) amounted to just shy of $28 billion in 2014, with 2.7 billion units sold.

Edit: Just to be clear, all the figures in this post represent industry revenue, and not consumer sales.

This was up about 4.6% from 2013, but only up 1% from 2012:

The trade segment showed a similar dip in 2013 before rising 4.2% in 2014, but has yet to equal the 2012 peak:

But this being an ebook blog, we’re not interested in the overall market so much as the ebook and audiobook markets.

Downloadable audiobooks are still a small segment in absolute terms (48 million units) but it is growing at a fast clip. The segment saw record growth in both units (27.0%) and revenue (26.8%) over 2013, while physical audiobooks slightly declined.

As for ebooks, the monthly Statshot report from December 2014 already told us that the market was up slightly, and today the AAP tells us that the total market grew by 3.8% to an estimated $3.37 billion dollars, with 510 million ebook units sold (up 0.2%).

As I pointed out this morning, that is more than twice the ebook unit volume Nielsen reported for 2014.

That’s almost as large of a volume as the number of hardbacks sold in 2014 (568 million), and best of all it doesn’t include the ebooks subscription estimates.

For the first time ever, the AAP is tracking ebook and audiobook subscription services. They estimate that 2.47 million and 3.88 million audiobooks were loaned in 2014.

There are no figures for 2013, but that is not a serious issue as any figure would be incredibly small. The US ebook subscription market only really got started very late in 2013, and KU of course did not launch until July 2014.

In terms of the total units sold in the trade segment, ebooks amounted to 21% of volume:

All of the above data is based on the press release sent by the AAP on Wednesday. You can find a copy of that release over on DBW.

But before I go, here’s one final note. The AAP also estimates that brick-and-mortar stores saw a resurgence in 2014. Books sold by physical retail stores saw an increase of 3.2% in revenue ($3.80 billion from $3.68 billion) and 4.1% in units (577 million from 554 million) in the trade category.

More books were still sold online (832 million units in volume and $5.90 billion in revenue) but the increase in offline sales lends credence to the reports of the revival of US bookstores.

About a week and a half ago I reported on and expressed doubt about a new estimate from Nielsen Pubtrack which said that 6% fewer ebooks were sold in the US in 2014. At that time I had no evidence to prove that the Pubtrack numbers were off, but since then I have been digging into the background.

Today I can report that the Pubtrack estimate of 223 million ebooks sold in the US in 2014 (as reported by The Bookseller) was not just bad, it was completely erroneous. I have two sources which say that the US ebook market is at least twice as large as Pubtrack thinks it is.

My first source is the pseudonymous Data Guy (the one behind the Author Earnings Report). His calculations suggested that around 513 million ebooks were sold in the US ebook market last year.

And for those of you who want an official figure from a named source, my second source is the Association of American Publishers. They just released their annual estimates of the US book market, and they say that 510 million ebooks were sold in the US last year (that volume also grew by a fraction of a percent).

Yes, the AAP says that the US ebook market is over twice as large as Nielsen had claimed.

It turns out that Nielsen widely over-estimated its ability to track the US ebook market, and I can tell you why.

While Nielsen reports its Bookscan estimates of the print book market based on data from several dozen retailers, the Pubtrack ebook market estimates come from unit sales data supplied by 30 US publishers.

That is not a bad information source, if you know what you’re doing, but apparently Nielsen does not. Here’s what they told me about Pubtrack when I followed up:

PubTrack Digital is a publisher aggregated eBook sales tool in which publishers are the data suppliers who send their complete and confirmed eBook unit sales to Nielsen every month.  This eBook measurement service gathers point-of-sale data (indirectly from 40+ retailers) through a panel of over thirty US publishers – representing about 85% of the nation’s eBook sales.

Yes, Nielsen thinks the 30 publishers it tracks represent 85% of the market, when in reality they represent around half that number.

This comes as no surprise to anyone who has read even one Author Earnings Report, and I was tempted to make that point when I first learned about Nielsen’s error last week. But I held the story because I knew that the AAP would be releasing new data this week which would either confirm or disprove Nielsen’s figures.

And I am glad I waited, because this shows that Nielsen’s understanding of the US ebook market is about as accurate as if they had thrown darts at numbers stuck on the wall.

I reached out to Nielsen for a comment on this story. I will update this story should I receive a response.

images by Jessie Pearl, David Bergin Photography

Techcrunch reported on Tuesday that the Dutch new startup Blendle is going to have a chance to show whether micropayments work on a large scale:

Blendle, a Dutch startup that’s applying a Netflix style marketplace to journalism, has signed up the mainstay of German publishers to its pay-per-article market. It said today that all major newspapers and magazines in the country have announced they will start selling individual stories via its website. The list includes Bild, Die Welt, National, Der Spiegel, Die Zeit to name a few. 

Blendle launched its service in April 2014 in the Netherlands and now has more than 300,000 registered users, up from 130,000 last October. On the publishers side, it has signed up a total of 18 daily newspapers and 15 weeklies from 14 publishing houses — with two operational markets (Holland and Germany), and English-speaking media in the U.S. next on its hit-list.

For those just tuning in, micropayments are a particular type of paywall where a consumer pays for access to a single article rather than access to an entire website.

Micropayments have been bandied about as a business model in the news industry since 1998. Guess how many times it has been successfully tried in the past 17 years?

If you guessed zero, you would be correct.

The idea didn’t work when Kachingle (remember them? exactly) tried it in 2009. It also didn’t work during the first tech bubble when Cybercoin, Millicent, Digicash, Internet Dollar, BitPass, FirstVirtual, Pay2See, and many others crashed and burned (as detailed by Clay Shirky in 2003). Micropayments also didn’t work for PaperC (they sold textbooks by the page).

Nevertheless, the idea keeps coming back every few years. And just as predictably, pundits have been pointing out why the idea won’t work. (TechCrunch even weighed in back in 2009.)

I’ll boil it down for you. It all comes down to psychology.

While you could blame the tech bubble for the earliest failed attempts, the idea continues to flop not because the tech wasn’t ready or because the prices were too high but because no one has found a way to reduce the mental costs paid by the consumers.

Nick Szabo coined the term mental transaction costs to describe the process consumers go through when they decide to whether something is worth buying or not.

Take, for example, a cheeseburger at McDonalds; is it worth $5? If I offered it to you buy one get one free, would it be worth buying then?

The time you spent contemplating the value of that cheeseburger is an example of mental transaction costs. No previous micropayment has managed to reduce this cost; instead, as Clay Shirky pointed out in 2003, the mental transaction costs increase as the price drops.

While that might sound contradictory it does explain why you might be more willing to buy a $300 gadget than pay $1 for an app (The Oatmeal’s comic is funny because it’s true), and it’s not good news for services like Blendle.

From what I read about Blendle, they have not found a way to reduce the mental transaction costs. Rather, their platform doubles the cost.

First a consumer has to decide if an article is worth paying for, and then after they’re done they will get to decide if they want to ask for a refund. While that is intended to act as a negative reinforcement feedback loop to discourage clickbait, it is also going to double the aggravations placed upon the consumer.

That added cost could cause Blendle to fail even faster, but either way I am expecting Blendle to prove once again that this idea simply won’t work.

Thoughts?

image  by photosteve101

Google Play Books might not get much love from the book publishing industry but it is proving far more popular with users.

Earlier this week the app reached a billion installs in Google Play. That’s one install  for each dollar Facebook spent on Instagram, or one install for (about) every seven people in the world.

Initially launched in late 2010, Google Play Books grew out of the Google Books book-scanning project as it slowly morphed from an effort to make all the world’s books searchable (a pre-Kindle goal) to selling those books (a post-Kindle goal). The store is now open for business in over 60 countries.

Along with Facebook and WhatsApp, Play Books is only the ninth app in Google Play to have the counter tick over into 10 digits. It passed the milestone before Games, Music, Movies, and Newsstand (which makes sense given that those other apps are considerably newer).

At this point I am sure some are remembering that Play Books comes pre-installed as part of Google’s bloatware, but I wouldn’t be so quick to discount today’s news. Google has said in the past that they don’t count pre-installed apps when reporting app downloads, and instead only count actual downloads.

On the other hand, I have found many complaints that Google’s reporting is notoriously inaccurate, so we might want to take this with a grain of salt.

That said, for the longest time I’ve been saying that Google Play Books does more business than the Nook Store. I first suggested that possibility in July 2014, and over the past 11 months Play Books installs continued to rise while Nook digital revenues continued to drop by 50% quarter after quarter (it’s down to $41 million at last report).

If that hypothesis wasn’t true in July 2014, it has to be true in June 2015. But unfortunately for me, I can’t prove it. Google still hasn’t told us how many ebooks they sell each quarter, and that leaves me in the position of having to ask a question and let you decide:

Do you think Google sold more or less than $41 million worth of ebooks in the first quarter?

With a billion installs, I don’t see how it could be less.

Android Police

image by Vala Run

The gadget maker announced on Monday that it was retiring Apple Newstand and replacing it with Apple News, a Flipboard-esque news aggregator which is likely based on the PRSS digital magazine paltform Apple acquired in September of last year (and possibly also Booklamp).

Techcrunch and Slashgear report that the new app will come bundled with iOS 9 and will ship with articles from a number of publishers, including Condé Nast properties like Vanity Fair, Vogue, and GQ, The New York Times (with thirty free articles a day), and ESPN.

News can be summarized as Flipboard with search, though I doubt that either company would be too enthused by the description. Apple’s Susan Prescott walked the audience through the app, explaining that it asks your interests to “get a sense of what you like.” The result is a personalized content feed.

Apple stressed the aesthetic of the app, noting its layout functions that help content be arranged in a pleasing fashion, and what the company called “rich typography.” The app has another key feature: Privacy. Apple said during its keynote that user data will not be shared with third-parties. The idea of data privacy was a theme of Apple’s keynote, and sat well as a direct swipe at Google, a key rival.

There was also a report from early this morning that Apple would have advertising inside the app and offer publishers terms similar to the terms for Facebook Instant Articles. I don’t see any details like that being reported in the official announcement, so I guess it turned out not to be true. but I did just read a tweet which appears to confirm the report. Update: The news is confirmed on the Apple News developer page.

***

So Apple has launched a Flipboard competitor. Interesting.Do you suppose they’ll repeat their past bullying?

Apple has been known to make life difficult for competitors by playing games with said competitors' iOS apps. This includes ebook apps, web browsers, and (most recently) iOS companion apps for the Pebble smartwatch.

Do you suppose Apple is going to play similar games with Flipboard once Apple News launches?

Thanks, Jiminy!

image via Techcrunch

The UK Publishers Association released a new report this week which summarizes a recent pilot study of library ebook lending. The pilot program looked at the effect of remote library ebook lending on library visits, bookstore traffic, etc, but I’m not sure that it actually tells us anything.

You can find the report and the related press release on the UK Publishers Association website, but the tl;dr version is that the pilot was conducted on such a small scale that I’m not sure whether the study actually failed to find an impact or simply wasn’t big enough for the impact to be measured.

Here’s the background:

• the pilot added 893 (out of a planned 1,000) front list titles to 4 participating libraries' catalogs (Peterborough, Newcastle, Derbyshire, and the London suburb Royal Borough of Windsor and Maidenhead – a suburb of London)
• the new titles represented a huge addition to these libraries digital catalogs and loans (few front list titles had been previously available)
• the ebooks were loaned under the standard terms from OverDrive

When I first covered this pilot last spring, I thought it could find a way forward for libraries in the UK, which typically had (have?) an anemic supply of ebooks that was far more limited than the selection available in the US.

But now that I have the report I have to wonder how this was worth spending £40,000.

The pilot purports to test the impact of remote e-lending, a fancy name for borrowing ebooks from the comfort of your own home. Given that UK library patrons can already borrow ebooks from home (just like in the US), I don’t see why this would need a pilot rather than a monthly survey.

But never mind that; let’s look at the impact.

• eBook loans increased significantly, for obvious reasons (adding new titles would attract new interest). But loans also declined from the beginning of the pilot, suggesting that adding a mere 873 titles was not enough to keep patrons coming back.
• There was no impact on commercial ebook sales, but that could just as likely be due to the small size of the pilot and limited number of titles rather than stand as proof that library ebooks don’t hurt trade sales.
• The pilot had also previously failed to show whether e-lending could drive sales, but as I pointed out last fall the pilot was not set up to actually measure how one could affect the other.

So there was no impact, but at least we have a survey report to show for the £40,000 spent on this pilot.

Library patrons who checked out ebooks were polled on how a larger ebook catalog might affect their buying habits:

Those are good questions to ask, but I think the survey is missing several questions which would have better shed light on patrons' buying behavior.

Had I been asked I would have said that a larger ebook collection would not impact my buying habits because a limited collection would push me to borrow the book in paper form. Unfortunately that is not an option on this survey, because apparently they forgot to take paper books into account.

***

All in all, folks, if this report wasn’t a complete waste of time then I don’t know what is.

Between the stuff that could not be measured at all, the metrics which weren’t measured correctly, the questions not asked, and the overall tiny sample size, I don’t see the value of this report.

images by Thomas Leuthard,  mlibrarianus

With four of the five major publishers going back to agency, ebook prices are bound to remain high and will continue to incite arguments between readers, publishers, and authors as to the best price for an ebook.

This is a debate which will never end, but in the interests of moving it forward I would like to address one argument I hear, namely that traditional publishers have to price their ebooks higher because they have more overhead.

For example, author Jody Hedlund posted this argument on her blog yesterday:

Traditionally published books have more people involved in the publication process, thus need to generate more revenue in order to pay everyone who had a hand in the book: two or more editors, office staff, the cover design team, the cover model, photographer, the marketing staff, publicist, sales representatives, and more. And let’s not forget, the author also has to be paid! No, Ebooks may not require the same "print" costs that a hard copy or paperback may incur, but as you can see, the costs of traditional publication go beyond the price tag of paper and ink.

While this might have some weight on the publisher side of the debate, it is viewed with contempt from the reader side – and with good reason.

It asks the reader to offer our charitable support to multi-national, billion dollar a year publishing conglomerates (Hedlund has books with HarperCollins and Penguin Random House). We’re asked to make up for a publisher’s poor business decisions, including the decisions to:

• buy and maintain Manhattan offices,
• hire too many people, and
• grow beyond any reasonable scale.

When you put it that way, the conclusion is obvious. Readers have no moral or financial obligation to support a publisher’s bad decisions  or flawed business model.

Publishers don’t have to be based in Manhattan, they don’t have to hire huge staffs, and they don’t have to operate inefficiently.

The fact of the matter is, folks, books simply don’t cost that much to produce. Much of what is spent at the major publishers goes to overhead costs, including Hachette’s open floor plan office and the Big Five’s candlelit dinners at expensive Manhattan restaurants, to name a couple examples.

Strip away the inefficiencies and you’ll discover that the actual cost of producing a book is a lot lower than you might think. And it’s not just indie authors saying that; there are publishing startups saying the same thing.

Last week at BEA 2015 I sat down with Enrique Parrilla, the CEO of Pentian, and discussed that startup’s crowd-funded business model. Pentian invites readers to back a book, and once it is funded Pentian publishes the book both as an ebook and as a print book (also, sometimes, an audiobook).

Pentian’s ebooks are priced between $5 and $9 in the Kindle Store. Of that $9, 10% goes to Pentian, 40% goes to the author, and 50% goes to backers.

Here’s the fun part: Pentian’s production costs are usually in the range of $3,000 to $10,000 per book (an audiobook costs around $6,000).

Yes, Pentian, which lacks the overhead of the legacy publishers, can publish a book for under $10,000 and still pay authors a better royalty than just about any major publisher.

Could someone tell me again why I should pay for the bloat and inefficiencies of a major publisher?

I don’t get it.

image by Philip Taylor PT

About four months ago Amazon started pitching a new advertising service to authors and publishers who distributed ebooks through KDP Select. Indies can pay anywhere from 2 cents to a buck CPC to get their book advertised on Amazon’s website. With a minimum ad buy budget of $100 and the option to suspend an ad campaign at any time, Amazon’s AMS program (Amazon Marketing Services) is within the reach of the average indie.

So how well does it work?

It’s hard to say. Aside from some early reports on KBoard, no first-hand accounts crossed my radar for nearly four months (did I miss something?), but then last week a new post crossed my desk.

Chris McMullen is an indie author, and he published an in-depth report on his experiences in advertising through Amazon. You may have noticed that I included Chris’s post in a morning coffee post last week. I was too busy at the time to call it out with the attention it deserved, so today I pulled it out of the pile and reread Chris’s post.

It’s a great primer on the topic. Chris lays out the benefits:

• Prime real estate. Your ad shows directly on Amazon product pages, where customers are already shopping for books. You’re not trying to make people leave one site to visit another.

Challenges:

• Stoppage. Your AMS can actually be stopped due to low relevance by Amazon. Low relevance is either a sign of poor targeting, or a product page that has room for improvement (cover, blurb, Look Inside, even the book idea comes into play here). Your ad is likely to be stopped due to low relevance if your CTR is well under 0.1%. If only 1 out of 3000 people who see your ad click on it, there is a good chance that your ad will be stopped. If your ad is stopped, you can create a new ad, but be sure to strive for more relevant targeting.

And unexpected side effects:

Another thing that I’ve seen are indirect benefits. Many other authors have seen similar indirect benefits. Several authors have seen an increase in borrows. A couple authors reported an increase in borrows, then a decrease in both sales and borrows when the ad stopped, and a return when a new ad was run. A few series authors have reported improvement in other books in the series. But not all authors have seen such improvements; indirect benefits are not guaranteed.

If you’re an indie author and haven’t read Chris’s report, you should. He’s basically written the book on AMS, and if not that then he’s written a new chapter of a book on how indie authors can use advertising to promote sales.

That’s not a new topic, I know. Authors and publishers have been using email blasts like BookBub to promote their books with some success, it’s just that indies now have a new option.

Chris McMullen

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So tell me, have you used AMS yet? What did you think? Did it work for you?

image by woodleywonderworks