Nate Hoffelder

Every so often I read the pondering of another pundit wondering why ebooks have plateaued at somewhere around a third of the US trade book market, and then I come across surveys which explain the reason.

Well, one of the reasons.

Over the weekend Quartz posted this nifty chart. It’s based on a survey of 1,200 college students in the US, and like past surveys it shows that students still prefer print textbooks over digital.

This comes as no surprise to me (though the details on which is better for specific uses is useful). While I haven’t read a survey on preferences before, I have seen numerous surveys that digital textbook adoption has lagged the industry hype and that mobile device adoption for school work trails behind ownership.

As we’ve seen from the failed startups Kno and Coursesmart, college students aren’t buying digital textbooks. In part that is a market issue caused by college students needing to resell their overly expensive textbooks, but this has another cause: usability.

Digital textbooks are great, right up until you need to have several of them open at once. The issues are only heightened by the fact that most textbook titles can’t be borrowed from the library as ebooks, meaning that a student would have to buy them (again, market constraints). Once you begin to actually use a digital textbook, it’s pretty clear why print is more useful.

So this survey comes as no surprise.

It was interesting, though, to learn that activities like scheduling, reading, note taking, and research are moving to the laptop. This would be a case of students finding additional benefit in a gadget they already own. This doesn’t cost them anything other than time so there’s no market in it, but it is good news for companies like Evernote.

Noted author and firebrand JA Konrath was one of the first indie authors recruited by Amazon to join KDP Select when it launched with Kindle Owner’s Lending Library in late 2011 and now he’s the latest high profile indie author to make an exit.

Konrath revealed on his blog today that he’s in the process of pulling his titles from KDP Select, which supplies indie ebooks to both Kindle Unlimited and KOLL. He made the decision a few weeks ago, and the ebooks will be out of KDP Select by the end of January.

When one commenter assumed that Konrath knew all along that subscription services devalued books and asked why leave the party now, Konrath explained:

I still don’t know that. Some authors' sales have dropped. Others have risen. I need more data, so I opted out several weeks ago. But the period is three months, so they’re still enrolled until January.

Here’s what you missed; a KDP author CAN opt out. It’s our choice.

McM doesn’t seem to be offering a choice. That’s bad. Really bad.

The reason most writers sign legacy deals, other than getting an advance, is legacy’s ability to get paper books onto retail shelves.

This sounds as if McM is foresaking paper–the one part of the industry they controlled–and short-selling their authors.

If I was a McM author, I’d be worried, pissed off, and wondering why the hell my publisher did a complete about-face from the stance that made them collude and price-fix.

Konrath is at least the second prominent indie author to announce his exit from KDP Select in the past month. He follows HM Ward and other authors in abandoning an idea which had seemed so promising 3 years ago.

As you may recall, for the past several weeks indie authors have been debating whether Amazon’s indie focused subscription ebook services offered enough value to indie authors. While the more limited Kindle Owner’s Lending Library had proven over the course of a couple years to be a net positive, in the 5 months since it launched the all-you-can-read Kindle Unlimited has not.

HM Ward sparked the debate earlier this month with her dramatic announcement that she was pulling all of her titles out of KDP Select in response to a shocking decrease in revenue. In the days that followed, numerous authors agreed with her, revealing that they too had seen dips in revenue following the launch of Kindle Unlimited.

And now Konrath is joining the exodus. He hasn’t shared details on how KU impacted his sales, but Joe is not one to make a business decision without first crunching the numbers. And if he is departing for greener pastures, indie authors who are still in KDP Select need to seriously consider whether they should stay.

So long as KDP Select is a net positive, I think they should stay in. What’s more, if the number of prominent indies pulling out of KDP Select increases, the situation for the less successful authors might improve.

At this point it is really too early too say.

What do you think is going to happen next?

image by Krysten_N, Abode of Chaos,  jorgempf

 The InkCase Plus looked like a great idea when I backed it on Kickstarter this summer, but now that my order has finally arrived I wonder if I may have set unrealistic expectations.

I would normally wait a week to post a review, but I’ve had a few requests to post my first impressions. To put it simply, I’m not happy.

The electronics are as good as the early sample I saw it in July, but the software hasn’t been improved any and the case itself is disappointing.

Hardware

For those not familiar with the InkCase Plus, it’s a system for a universal smartphone case which adds a 3.5″ secondary E-ink screen to almost any smartphone. Its developers came up with the idea of dividing the case into two modular components: the electronics, which can be mass produced in job lots, and the case itself, which can be designed to fit specific smartphone models and manufactured in smaller quantities.

That was a good idea when the InkCase Plus was first announced, and it turns out to be an even better idea today because the case which is sitting on my desk, well, I’m not happy with it.

Cases for five different smartphone models were produced for Kickstarter backers, but since I don’t have one of the more popular smartphones I instead requested the large universal case (which is supposed to fit most smartphones over 5″ in size).

The case looks like it was manufactured as cheaply as possible. As I hold it in my hands I get the feeling that this is a case I would find in a discount store for a couple of bucks, and not one which cost $89.

What’s more, I’m not sure that you can technically call this a case. I’m not bothered by the fact it doesn’t enclose my smartphone; I expected that. But I would not call this a case because there’s no way to attach it to my smartphone.

The photos shared by the developer (here) suggest that the case is supposed to have a sticky spot where you would place your smartphone. It does not, and I can’t find anything in the retail box  which resembles a piece of double-sided adhesive. (The early images also look nothing like the case I received, but that’s not unusual.)

So even if this case met my quality standards, it wouldn’t meet certain functional standards. I was never planning to use it as a case, so it doesn’t affect me so much, but it’s still frustrating.

The electronics, on the other hand, are much more satisfactory.

The ereader module is built around a 3.5″ Pearl E-ink screen. There’s no frontlight or touchscreen, but it does have BT, a battery, and a CPU which is just powerful enough that this could have been made into a stand alone ereader.

It’s a very simple device with just 3 buttons on the front (power and page turn buttons), and since it is so thin and small I can easily hold it in my hand.

I’m currently using the ereader module by itself, in the included folder case. This is also pretty cheaply made, but I can live with it because the ereader module looks cute and easily fits in my pocket.

I’m not even bothered by the fact that the sticky in the folder case is so strong that the rear of the ereader component regularly pops off; I have to be incredibly careful when removing the ereader component out of fear of damaging it.

Now if only the software were as good as the electronics.

Software

The InkCase Plus was designed as a smartphone accessory, so pretty much all functions require a companion app to be installed on your mobile device. Since I covered the existing apps back in July, I won’t repeat myself here.

There’s really not much new to say about the software. One of the companion apps, EpiReader, has been updated with a new feature (it now connects to Dropbox) but there aren’t any new companion apps for your smartphone/tablet, and so far as I can tell, the device itself is running the same firmware as the unit I tested in July.

And that is a little disappointing.

While the InkCase Plus does have a few useful features, I had been told that it would have new features by the time it shipped, including the option to use it as a stand alone ereader. That hasn’t happened yet.

You can read on it, but you’ll need to keep it paired with your smartphone/tablet so the companion app (EpiReader) can send the ebook over to the device one page at a time. Given that this is intended to be a smartphone accessory, that is not an unworkable idea, but the device is capable of doing more.

BTW, when I looked in July, the InkCase website mentioned new apps, including a coupon app and one called InkCase Now. Neither has been released, and I can’t tell you when they will be available.

Conclusion

I’m torn.

On the one hand, I know that since I hardly use my smartphone I’m not the target demographic, and thus I shouldn’t be commenting on a device which I only have a very specific interest in. (I’m also not a fan of smartwatches and other second screen smartphone accessories.)

But as I sit here looking at the InkCase Plus on my desk, I wonder whether even a smartphone user will be happy with the InkCase Plus. The only part I am happy with is the ereader module; both the software and case come up short.

The case I got is non-usable junk; there’s no other way to put it. And there’s really not much in the way of software features. What’s more, this device’s best feature is crippled by poor design decisions.

I’m going to keep playing with my unit, but unless new software is released and unless I can get a better case I just don’t think it will prove all that useful.

Macmillan CEO John Sargent has just revealed in a public letter posted on Tor.com that Macmillan has signed a deal with its biggest ebook customer and will soon be dabbling in the subscription ebook market.

To start, the ebook deal was signed last week, and while we have less than complete info Sargent did say that:

Late last week Macmillan reached an agreement with Amazon on a multiyear deal for print books as well as a multiyear deal on the agency model for e-books, starting on January 5, 2015. All our other retailers will also be on the agency model, leaving Apple as the only retailer who is allowed unlimited discounting. Irony prospers in the digital age.

Sargent is less than specific on the terms of the contract, but I would be willing to bet that the deal is probably much closer to the deal Amazon signed with S&S, which might best be described as modified agency (or so it appears from what few details have been leaked).

Update: The WSJ confirmed that this is a modified version of agency similar to the S&S deal:

“We are happy with this agreement, as it allows us to grow our business together with Macmillan and their authors,” said a spokeswoman for Amazon in a statement. “Importantly, the agreement specifically creates a financial incentive for Macmillan to deliver lower prices for readers.”

Macmillan confirmed that it will receive better terms from Amazon when it offers lower prices on its titles.

Macmillan is the third major US publisher to sign a new contract with Amazon in the past two months. S&S went first, inking a deal not quite two months ago, and Hachette settled its dispute with Amazon a few weeks later. (There’s no news yet on whether PRH or HarperCollins are talking terms with Amazon.)

These 5 publishers have had to renegotiate their deal with Amazon and other ebook retailers following their decisions to settle the ebook price fixing antitrust lawsuit brought by the DOJ and states' attorneys generals in 2012.

Llike Hachette, which relies on Amazon for the majority of its ebook sales, Amazon has Macmillan over an ebook barrel. Sargent has revealed that Amazon is the single largest seller of Macmillan ebooks:

In reaching agreement with Amazon, we have not addressed one of the big problems in the digital marketplace. Through great innovation and prodigious amounts of risk and hard work, Amazon holds a 64% market share of Macmillan’s e-book business.

Macmillan

He goes on to explain how Macmillan will respond to Amazon’s dominance of the ebook market, namely by looking for other markets:

In our search for new routes to market, we have been considering alternative business models including the subscription model. Many of you know that we have long been opposed to subscription. We have always worried that it will erode the perceived value of your books. Though this significant long-term risk remains, we have decided to test subscription in the coming weeks.

The details are less than complete, but he says that Macmillan will test the subscription market first with "backlist books, and mostly with titles that are not well represented at bricks and mortar retail stores". No partners are named, but I would expect that Macmillan will sign with Oyster and Scribd, but not Kindle Unlimited, which doesn’t pay as well.

Oyster and Scribd have already signed deals with HarperCollins, S&S, HMH, and other publishers big and small, few of which have signed with Amazon.

images by seanmfreese, docoverachiever

Google shuttered Google News in Spain on Monday in anticipation of changes to Spanish copyright law, and if you believe the data-free post Matthew Ingram publisheed at GigaOm yesterday, Spanish news publishers are already seeing the effects.

I’m not convinced, but Ingram says that:

As expected, Google removed all Spanish publishers from its Google News index on Tuesday, which the company said it was forced to do as a result of a new law — a law that publishers themselves lobbied for — which requires anyone using even a short snippet of copyrighted content to pay a fee. According to the web-analytics service Chartbeat, within hours of their removal from the Google service, Spanish media sites saw their external traffic fall by double digits.

I would suggest that you take this report with about a pound of salt. While I do expect that the Spanish news sites will lose web traffic as a result of Google News closing, I think it’s too early to say for certain that this has occurred.

This early report is based on a single day’s traffic from a limited number of sites, and thus there’s hardly any data yet.

Also, Ingram doesn’t cite any actual specific traffic stats to back up his headline.  Far from showing that traffic "plummeted", the only data Ingram has shows that one type of traffic decreased slightly, and even that wasn’t detailed with a specific figure:

Josh Schwartz, the chief data scientist at Chartbeat, said the company doesn’t track every Spanish news site or publisher, but it has enough data on them as a group to indicate just how dramatic the traffic decline was. The service tracks about 50 sites, he said, ranging from small media outlets to the largest newspaper publishers, and looking at the data shows “a pretty massive difference” in traffic compared to a similar day before the removal. On average the drop is between 10 and 15 percent (Chartbeat only includes traffic from clients who have consented to have their anonymized data used).

Please note that he is only referring to external traffic here; Ingram doesn’t say how much overall traffic declined.

But he did post this unlabeled and thus useless chart:

For all we know, the actual effect shown in this chart might equate to only a couple percentage of a website’s total traffic, and thus would qualify as a fluctuation and not a "plummet", which is how Ingram described it.

Just to be clear folks, I fully expect that Spanish news sites will see a dip in traffic as a result of the Google News closure, but to proclaim that traffic has plummeted based on a single day’s data (and what’s worse, not share the data) is simply clickbait.

I think that we should wait at least a week before declaring that Spanish news publishers were doomed by their own folly don’t you?

A new report from the Association of American Publishers today reveals that publishers revenues were up slightly in the first 9 months of 2014.

Total trade revenues for the 1,209 publishers supplying data to the AAP were up 2.8% (to $5.02 billion from $4.88 billion). The adult segment dropped 3.3% (to $3.31 billion from $4.42 billion), while the religious presses segment grew by 2.1% (to $410 million from $393 million).

The children’s/YA segment continued its extreme fluctuation in sales for the third year in a row, with revenues up 22.4% (to $1.31 billion from $1.07 billion). This segment showed similar growth in 2012, and a similar decline in 2013. It’s more than likely that the fluctuation in all 3 years had the same cause: blockbuster movie adaptations of YA novels (or in the case of 2013, the lack of the same).

Coincidentally, the AAP also pointed out in their press release that YA ebooks revenues increased at a faster clip than the overall segment, with a 52.7% change in the first nine months.

In terms of formats, ebooks were up, hardbacks were down, and paperbacks were up. Total ebook revenues increased by 5.6% over 2013 (to $1.2 billion from $1.13 billion), while hardback sales dropped by just under a percent. Paperback sales saw similar healthy growth, increasing by 4.1% (to $1.51 billion from $1.45 billion).

The AAP also shared the tidbit that downloaded audiobook revenues continue to outpace the market, growing by 27.0% growth over the same period in 2013.

And in terms of the overall revenues reported by the 1,209 publishers, the AAP said that publishing is healthy thus far in 2014. Revenues were up 4.9% in all categories (Trade, K-12 Instructional Materials, Higher Education Course Materials, University Presses, etc.)

Local sources are reporting that Kindle Unlimited launched today in Brazil and France. Readers in those two countries can now subscribe and pay Amazon 10 euros or 19.90 reals per month for access to a catalog of over 700,000 titles, although given the limited number of local titles I am not sure they will want to do so.

Actualitte broke the news that Kindle Unlimited launched in France with 20,000 titles in French. The service costs the same as in Germany, Italy, and Spain, and enables readers to read as many books as they like each month from a catalog of 700,000 mostly indie titles.

In addition to best sellers such as Harry Potter and books by Raymond E. Feist and Maya Banks, there are also indie titles like  Projet Anastasis by Jacques Vandroux and Sans témoin by Patrick Philippart, as well as the same public domain classics which can be found everywhere.

In related news, Publish News Brazil surprised me this morning with the report that Kindle Unlimited is now available in Brazil. It costs 19.90 Brazilian reals, or about $7.70 USD, per month. In addition to the 700,000 titles mentioned above, KU also now includes 10,000 titles in Portuguese

I am a little surprised to read about the launch in Brazil; when rumors of the launch went around a couple weeks ago I thought that KU wouldn’t launch in Brazil until the middle of 2015 if not later.

I thought Amazon would have trouble rounding up enough titles that they wouldn’t be able to hit their minimum quota, and it seems I was right. Amazon launched KU in Brazil with far fewer titles in Portuguese than in any other local language. Whether that will negatively impact reader adoption is going to have to be left up to the market.

Given the historically high prices of ebooks in Brazil, the limited selection of local titles might not have much impact. But it is too early to say.

In France, KU is competing with subscription services like Scribd, while in Brazil the competition includes Scribd and Nuvem de Livros, which is native to Brazil and possibly has an even a larger subscriber base than KU, Scribd, or Oyster (no one is talking, so we don’t know).

Amazon might still be avoiding the region, but Kobo isn’t so squeamish. This Toronto-based ebook startup has inked a deal this week with Lionfish to distribute Kobo ereaders to retail and online stores in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE.

Readers will soon be able to find the  Kobo Touch, Aura, and Aura H2O in 34 local stores, including Xcite, Virgin Megastores, and Dubai Duty Free Stores. Kobo reports that the hardware will also be available for purchase online at Modvito, Souq.com, and Jado Pado.

"Digital reading continues to rise across the globe and we’re thrilled to be entering G.C.C. countries to offer readers with best in class E Ink eReaders and eBookstore," said Jean-Marc Dupuis, Managing Director of EMEA, Kobo.

Kobo’s competitors in the region include local ebookstores like Kotobi.com, but not any of the major ebookstores. Neither Kindle nor Google Play Books are available in the region, and while Apple does sell hardware in the Middle east they don’t sell ebooks (source).

image by Leandro’s World Tour

I was the first to break the story last week that KU might be having a negative impact on indie authors' ebook sales, and as I have been reading the ensuing coverage I have realized that someone needs to point out the problems with relying on anecdotal data.

And as I sit here reading Porter Anderson’s piece in The Bookseller on Sunday, I can see that even Porter missed a valid counterpoint: that this type of decline has happened before (he also missed including me in his roundup of the discussion, but I am used to that by now). That leaves it up to me to question the narrative.

Last week I shared the tales of several indie authors who had seen a sharp dip in ebook sales in the months since Kindle Unlimited had launched. To make this even scarier, this included authors who both did and did not have ebooks in Kindle Unlimited.

There’s a scary trend if true, but as with any report based on anecdotal evidence there’s always the risk that your examples are the exception and not the rule. To be fair, sometimes the outliers are also the bellwethers, but given the history of the ebook market I wouldn’t be so sure in this case.

One other reason to doubt this trend, and this is a good one, is the behavior of the market last year.

It was around this time last December that I reported that some indie authors were seeing a big drop in sales during fall 2013. I cited Toby Neal (who had corroborating reports from other authors) as saying:

The DOJ price-fixing case with Apple and the Big 5 publishers was settled awhile ago, but September was when Amazon began really discounting big name books. I get several email lists of discounted books daily in my inbox, and I’ve been agog to see big names like Janet Evanovich, Louise Perry, Michael Connelly, Patricia Cornwell and most recently, Donna Tartt’s Goldfinch, one of the Best Books of 2013, going for 2.99 or less.

…

And in September, my sales went to half of what they’d been. They’ve stayed at half what they’d been in spite of doing active marketing, ads on Kirkus Reviews, giveaways, promos in those same lists I get in my email inbox, and launching two new books.

When I reported on indie authors' drop in sales last year I attributed the decline to greater price competition from the major publishers, a plausible idea. This year we are looking at anecdotal evidence of a similar decline and attributing it to the effect of Kindle Unlimited.

While it is entirely possible that we did identify the respective causes, it is just as likely that we fell for the post hoc logical fallacy. Given that we are looking at what could be a cyclical market trend, I think we need to consider the possibility that both declines have the same cause.

And in case you’re wondering why I didn’t raise this point last week, it’s because I didn’t think of it until a couple hours after I published that post.

I don’t know what would cause the declines, but I do think that it’s worth our time to ponder it and be ready just in case it happens again next year.

Why do you think the sales have declined?

While the major publishers are often derided as being so far out of date their new ideas could collect social security, Hachette has shown today that they are only 2 or 3 years behind the times – tops.

Hachette Book Group announced a new partnership this morning with the indie digital marketplace Gumroad to sell print books on Twitter. In what would best be described as a small experiment, Hachette and Gumroad will sell three print books "for a limited time and in limited quantities" via each author’s tweets.

The three books are Chris Hadfield’s You Are Here, Amanda Palmer’s The Art of Asking, and The Onion’s The Onion Magazine: The Iconic Covers that Transformed an Undeserving World. Palmer’s book will go live later this week, and the other two titles will follow days later. Each of the 3 books will be bundled with a bonus item. In the case of astronaut Hadfield’s book, for example, the extar will be a signed original photo, and The Onion's book will be  accompanied by a set of note cards featuring twelve of the editors' favorite magazine covers.

Given Gumroad’s focus as a digital marketplace, they make a strange partner for selling print books, but Gumroad’s integration with Twitter’s new “Buy Now” button makes them a good candidate for this program.

Now if only it had happened several years ago, back before Gumroad was an established bit player in the indie scene.

If Hachette had tried this pilot in 2011 it would have been a novel experiment with a still untested idea.  (Yes, people were selling ebooks via Twitter in 2011 – just with links that led to ebookstores.)

But in 2014, selling via Gumroad isn’t a novel concept any more. It’s common to the point of being passe, and some creators have even moved on from to other means for direct sales.

Lots of authors sell via Gumroad, but some have been tripped up by Gumroad’s limitations and stopped using it for direct sales. As Elizabeth Beeton of B10 Mediaworx pointed out in a blog post earlier this year, Gumroad has its quirks.

In addition to being an author and publisher, Beeton also sets up stores for other authors, and over time she kept getting tripped up by the same pair of problems:

1. The merchant is listed as GUMROAD on the customer’s credit card statement. No one who bought from B10 Mediaworx complained, but plenty of my client’s customers complained. As a result, there were quite a few sale disputes.

2. There is no “add to cart” for digital products. No one who bought from B10 Mediaworx complained, but plenty of my client’s customers complained. They had to check out each time they bought a title. Can you imagine if you need all ten?

In short, Beeton has shown us that Gumroad is not a good option for ebook or book retail – not unless you want to sell one book at a time to one person at a time.  And while that won’t be an issue with this pilot, if Hachette decides to step up their direct retail efforts they will have to go elsewhere.

In conclusion, while it might sound snarky or sarcastic to say that Hachette is years behind the times, in this case that is an accurate description.

Framed got a lot of buzz for its novel game mechanics when it was first shown off in May 2013, but now that the game is finally available it simply doesn’t live up to its potential.

Developed by Australia-based Loveshack Entertainment, Framed offered a new take on interactive fiction that made the user the storyteller.

As you can see in the following early concept video, a user rearranges the panels on the screen to change the outcome.  By changing the order of events, the user can have the protagonist find a tool, overcome his adversary, and escape:

When it comes to gameplay mechanics (the motions involved in playing a game), moving panels around like that is a novel concept. I do not know of anything quite like it, which I have been eagerly anticipating Framed ever since I first read about it. So when I learned last night that Framed had been released for the iPad a couple weeks ago, I immediately bought it and played with it.

Frame had the same panel swapping move as in the concept video, and some levels also let the player rotate a panel 90 degrees and change the path the protagonist takes (but that doesn’t happen until much later in the game). There are also a couple levels which involve one protagonist tricking another, but again, that doesn’t happen until much later in the game.

After spending about half an hour with Framed, I’m pretty sure I wasted $5. While Framed is based on a clever dynamic, the actual game is repetitive to the point that I am bored.

Rather than have the user solve puzzles with different goals and different solutions, the vast majority of the levels I played all had the same goal: avoid the cops. Other than setting things up so the protagonist can either bypass cops or sneak up behind cops and hit them over the head, there’s not much to this game.

The official trailer sums up the repetitive nature of Framed nicely:

While there are a few levels here and there that are based around unique puzzles, most involve escaping the cops.

To be fair to the developers, writing a puzzle is very difficult, and that is doubly true when one also has to develop a new platform for the puzzle.  But writing puzzles is also not impossible, and Loveshack has been working on Framed for close to two years now. That is plenty of time to come up with more puzzle ideas than "avoid the cops".

Don’t get me wrong, that is not a bad idea for a level design – so long as it is used as one of many puzzles to solve. But after it’s been used twenty or thirty times in a row (and is backed up by an annoyingly repetitive sound track) the idea gets old.

And that is a shame, because I would really have liked to have seen the puzzle idea explored to a greater degree. A true puzzle game based on Framed’s concept would provide hours of entertainment and offer a great value for the $5 price tag.

But as it is, I would not recommend that you get Framed.

You can find it in iTunes for $5.

As the year draws to a close many are looking back at 2014 and reflecting on the year’s events. Today I would like to take a look at an event which would have been a huge news story if it had ever happened.

As you may recall, for much of 2014 Hachette and Amazon were in a nasty contract negotiation here in the US. As we all know from following the news, Hachette fought a vicious media campaign against Amazon as a way of pressuring Amazon to give in, but what no one else knew was that Hachette had a second string to their bow.

Just so you know: I have very little evidence to back up the following post. I trust my sources, and I do have a little evidence, but you should take this report with a grain of salt.

Update: Hachette has confirmed my report, telling Publishers Lunch that:

Asked about the report, HBG spokesperson Sophie Cottrell told us, "We’re always doing internal experiments and many never see the light of day. The ebooksforall site was one of those experiments, and we shelved it months ago, in its early stages, to work on other projects."

Earlier this year Hachette secretly started developing an ebookstore called www.eBooksForAll.com. That store never launched, but my sources tell me that it would have sold Hachette titles in both Epub and Kindle formats.

Yes, Kindle. Hachette’s new ebookstore was going to use digital watermark DRM on the ebooks it sold.

Unlike encryption DRM like Adobe’s, digital watermarks are little more than tags which can be used to identify who bought an ebook and where. They are almost invisible to the end user, and that means that an eBooks For All customer could buy an ebook and sideload it on their Kindle.

In short, Hachette nearly launched a site which could have directly competed with the Kindle Store. I can’t tell you why it was not launched, but I do have some more background details.

The site was developed by an Australia-based ebook company called eBooks.com, which would operate the site on behalf of Hachette. The watermark DRM would have been supplied by Booxtream, which also provides a similar service to Pottermore and other ebook retailers.

eBooks For All was supposed to go live in the summer, and then in the early fall, but now that December has rolled around I figure the idea is probably dead, and thus it is safe to tell everyone about what would have been the biggest digital publishing story of the year.

***

At this point you’re probably thinking that this is a great story, but you also want to see some proof. Unfortunately, I don’t have much to show. Hachette hasn’t confirmed any of the details, and in fact they haven’t even acknowledged my existence.

But I do have a couple details to share. For example, there is the @eBooksForAll twitter handle, which appears to currently belong to someone called HBG Test. There are no tweets or identifying information on that account, though.

I also have a Whois history report (PDF) for www.eBooksForAll.com which shows that the contact name is Joe Mangan, the COO of Hachette Book Group. That report also shows that the site is hosted on Hachette’s servers and uses Hachette’s nameservers. (At this time the site is just a blank page.)

Hachette apparently acquired the domain in April 2014, not too long after their previous contract with Amazon lapsed. Is it just me, or does that raise some new questions as to why the contract was allowed to expire?

Without a response from Hachette, I can’t answer those questions, so if you have the ear of anyone at Hachette please do us all a favor and ask them about this site.

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As much as I would love to see this store launch (just to see what happened), I can understand why it did not.

As much as pundits may talk about publishers routing around Amazon and dealing directly with Kindle owners, there is a large group of Kindle owners who can’t be reached either because they either don’t know how to buy ebooks elsewhere and add them to their Kindle account, don’t know the option exists, or simply do not feel the effort is worth it.

This is part of the reason why Baen Books started distributing to the Kindle Store back in 2012 after over a decade of selling only through their own site, and it is also why Pottermore launched its ebookstore with close integration with the major ebook platforms.

On the other hand, there are times where you can only identify an unworkable idea after it is put into practice (this is why startups pivot). I would like to see what would happen if a major publisher followed Pottermore, but it looks like we’re going to have to wait a little longer before that happens.

images by dlofink, cogdogblog

Barnes & Noble released their quarterly statement today. Mixed in with the usual dry statistics was a bombshell: B&N is buying out Microsoft’s share of Nook Media. After almost two years of co-owning a moneypit, MS is selling off their interest and walking away.

In financial news, B&N reported that total revenues dropped 2.7%, to $1.7 billion, as compared to the same quarter last year.  Second quarter EBITDA also decreased slightly, from $76 million a year ago to $68 million. The press release mentions that retail was down, college bookstore sales were up, and of course Nook revenues were down.

B&N’s nook segment had sales of $64 million for the quarter, down 41% from a year ago. Hardware sales decreased 63% to $18.7 million for the quarter, a new low for Nook Media, Digital content sales totaled $45.2 million for the quarter, a decline of 21.2% from a year ago, largely due to customers fleeing a sinking ship.

And in the important news, Microsoft and B&N have decided to  go their separate ways. They’ve filed divorce papers today with the SEC stating that the two companies have terminated their commercial agreement.

Microsoft paid $300 million for a one sixth interest in Nook Media when it was spun out of B&N in early 2012, and they also committed to paying $300 million in operating expenses should Nook Media hit certain goals (expanding internationally, for example). According to the form 8-K, B&N will buy out MS for $63 million in cash and 2.7 million shares of B&N stock.

B&N is trading for around $20 right now, so the total purchase price will be around $120 million (plus or minus $5 million). In other words, Microsoft’s interest in Nook Media lost about 60% of its value in the time since Nook Media launched.

While that’s bad news for MS, it’s great news for Nook Media. While the company is losing out on a source of revenue, it’s also free from the constraints MS imposed. For example, the international Nook store was effectively confined to Windows 8 (the Nook iOS and Android apps were limited to only US and UK). Now there is a chance that B&N will expand the platform to also let its international customers use the other Nook apps.

Nook Media is still going to be spun out into a separate publicly traded company, but the launch day has been pushed back from spring 2015 to August 2015.

Many people have long been complaining that Amazon and other huge multi-nationals aren’t paying their fair share of taxes. I’ve heard these complaints in in the US, UK, and other countries, and now the UK Chancellor of the Exchequer is proposing a solution to the complaints.

The WSJ reports that George Osborne wants to enact what sounds like a corporate income tax:

The U.K. government Wednesday took aim at tech companies and other international firms, proposing a 25% tax on profits on “economic activity” that is shifted overseas.

Treasury chief George Osborne said in his autumn budget statement to Parliament that he wanted to make sure “big multinational businesses pay their fair share.”

The proposal makes good on Mr. Osborne’s warning in September that he was going to crack down on companies – particularly tech companies – that use complex structures to lower their U.K. tax bills.

“Some of the largest companies in the world, including those in the tech sector, use elaborate structures to avoid paying taxes,” he said. “That’s not fair to other British firms. It’s not fair to British people either. Today we’re putting a stop to it. My message is consistent and clear: low taxes, but low taxes that will be paid.”

When I first read this story, I was terribly confused. You see, I was under the impression that a company’s revenues were already taxed directly.

As I understood it, the UK collects a VAT (value added tax) on (almost) all commercial transactions. This differs from an American sales tax, where few transactions are directly taxed (mainly when you sell to consumers), and that difference means that the VAT is in effect a corporate income tax.

Yes, I know that the popular view is that the tax burden is born by consumers, but if a company’s customers are other companies then there are no consumers involved. And since Google’s main source of revenue is advertising, the idea that they will pass the cost along to consumers simply doesn’t make any sense.

Or did I miss something?

images by Images_of_Money

When Kindle Unlimited launched in the US 4 months ago there were many questioning whether it was good or bad for authors, and if the chorus of complaints over the past few days are any indication then the answer will be no.

HM Ward kicked off the discussion on Friday when she revealed that she was pulling out of KDP Select, the program Amazon uses to funnel indie ebooks into Kindle Unlimited.

Ward withdrew her books not because the average payment had dropped to only $1.33, but because her total revenues had fallen by 75%:

Ok, some of you already know, but I had my serials in it for 60 days and lost approx 75% of my income. Thats counting borrows and bonuses.  My sales dropped like a stone. The number of borrows was higher than sales. They didn’t compliment each other, as expected.

Taking a huge ass pay cut while I’m still working my butt off, well that’s not ok. And KU effected my whole list, not just KU titles. At the time of enrollment I had about 60 titles total.

I planned on giving it 90 days, but I have a kid in the hospital for long term care and I noticed my spending was going to exceed my income-by a lot. I couldn’t wait and watch thing plummet further. I pulled my books. That was on Nov 1,  & since then my net revenue has gone up. I’m now at 50% of where I was pre-KU. During the time I was in KU, I had 2 new releases. Neither preformed vastly different than before. They actually earned far less (including borrows).

When Kindle Unlimited launched in July, it was hoped that the increase in fees paid for loans would counteract the loss in income from authors not being able to sell their ebooks outside of the Kindle Store.

Sadly, a lot of authors are reporting that that is not the case. This story was picked up over on The Passive Voice, where Mimi Strong concurred with Ward:

I made the “All Stars” list for October. I don’t mean to sound ungrateful, but $1k is not going to make up for lost sales on other platforms. It doesn’t even cover the emotional toll of having to field emails from confused readers who can’t understand why they can’t buy my books.

…

In the end, I go with math and ignore emotions. I’m pulling out of KU. If my sales are better on other platforms, I’ll stay out. If my sales aren’t any better, I’ll go back into KU with gritted teeth and a few choice words. Nobody cares but me. I’ll go with the math.

Two authors complaining does not a trend make, but it is worth watching.

Speaking of watching, while looking into this story I noted what looks like the beginning of a worrisome trend. There are authors whose works weren’t in KU who are reporting that their incomes had dipped since it launched, almost as if readers were spending so much time reading the ebooks in KU that they stopped buying ebooks. With 750,000 titles, KU could be displacing ebook sales.

Juli Monroe, author and editor of Teleread, mentioned a dip a few weeks back, and there are similar reports from KBoards:

I’d like to add my voice to the choir of KU discontent. Before KU launched, I had seven novels, multiple serials and a few shorts through various names, and I was making a living solely writing fiction.

Along comes KU and now… well, I’m not.

My earnings are roughly 60% what they were back before KU launched with four releases since. I tried out KU for a few of my novels, saw a lot of borrows but a massive loss in earnings, so took them out again.

Now, earnings aren’t what they were, but they’re holding steady again. I have the great people at Kobo to thank for consistently spotlighting some of my books, meaning two months of bigger Kobo sales than Zon right now.

And there’s a similar report in the comment section at The Passive Voice:

KU definitely affected the visibility of my books, and as a result, my sales and revenues. When KU launched, my books not in KDPS/KU all dropped in rank crazy-fast. Luckily, I was running two upcoming Bookbubs and sales on other channels made up for the decline in Amazon revenue. However, once the Bookbubs declined in influence, my sales on the other channels declined as well so that I ended up being behind the 8-ball in terms of sales and revenue.

So I took the plunge and went all-in to KDPS again. Lends almost made up the difference and KU honestly revived my older lower selling series. However, I am still down overall from pre-KU levels. As soon as my KDPS terms are up, I’m back out, baby. I may keep my older series and my 99c shorter works in KDPS for the exposure and because even $1.33 is better than $0.3465, but I’m taking my longer better-selling and higher priced books out.

Again, two anecdotes don’t make a trend, but I am trying to keep this post to a reasonable length while also sharing a potentially important news story.

Even at 4 months old Kindle Unlimited is still too new for us to fully understand the effect it is having, and that includes the impact it may be having on authors who aren’t even in KU.

I plan to wait for more info on the effect of ebook subscription services, including Oyster and Scribd, before reaching any conclusions. Those other services offer publishers terms similar to ebook retail contracts, rather than paying them from a pool of money (like Amazon does with authors in KU).

I’m interested in finding out if the larger publishers are also seeing a drop in revenue elsewhere as readers spend more of their time reading books in one of the ebook subscription services.

Do you think that is what the publishers are seeing?

image by phooky