When 5 German ebooksellers got together last Friday and announced that they were joining forces against Amazon, I was far more pessimistic than most. I thought that this coalition wouldn’t be a real competitor to Amazon until the members were better at selling ebooks than Amazon.

I still haven’t seen any sign of salesmanship but today I did learn that Tolino does not appear to have the technical chops to go head-to-head with Amazon. Lesen.net reported this morning that the newly updated Tolino reading apps were flawed, buggy, and generally annoying existing users.

First, a little background. Tolino is a coalition made up of 5 German companies (Thalia, WeltBild, Hugendubel, Deutsche Telekom, and Bertelsmann), each of which had an existing ebookstore. According to their estimates at last week’s press conference, the 5 ebookstores had a combined 35% share of the German ebook market, with (my estimate) more than a million users between them.

And it is with those existing users that things went terribly, terribly, wrong. Reports are coming in from the customers of a  couple different ebookstores (Weltbilt, Hugendubel). Both of the Android apps for these ebookstores as well as the iOS app for Weltbilt suddenly stopped working last week after they were updated to work with the new Tolino platform.

Many users have reported in the past week that they can no longer access their previously purchased ebooks. Some are complaining that they can’t even stay logged in after they exit the app.

It’s so bad that the 1-star reviews have knocked one of the apps down below 2 stars:

Now, problems like this are not unique to Tolino. Even Amazon has released updated apps which cause problems, and in fact Amazon did just that a few weeks ago when a registration bug in the new Kindle IOS app cost users all the samples and ebooks currently on the device.

But Amazon also managed to address the problem within a few hours and fix it in less than a day. The current problem with Tolino is much more serious and has been going on for a week now, with no fix in sight.

That is simply not acceptable, not by any standard.  And until Tolino gets their act together they simply are not a serious competitor to Amazon – I don’t care what anyone says.

It’s been some time since I last had the chance to talk about a new product with a Pixel Qi screen, so I was very pleased when an email from Chris Swanner of Sol Computer arrived this afternoon. Feast your eyes on this beauty:

Sol Computer is now carrying a 10″ USB-powered monitor that features a Pixel Qi screen. It’s in stock and shipping right now, and a 7″ model will be available shortly.

I will likely nver get my hands on one, but based on the product listing and the video I must say that the production value is a little low; there’s no case shown. In fact all the images I have seen show what looks like a simple mount that was sticky glued to the back of the screen panel. But who cares; it works outside:

The retail price is not listed, but I checked and one of these babies will set you back $800.

No, that’s not a mistake. It really is that expensive, especially when compared to USB LCD monitors. You can pick up one of those on Amazon for under $100.  Heck you can even get a ViewSonic 22″ Android tablet/SmartDisplay for half the price of the 10″ Pixel Qi monitor above.

So why would anyone get this? Simple: because it works in direct sunlight.

Sure, there are a lot of tablets that work out side but few work well and even fewer work well in direct sunlight or brightly lit conditions. Pixel Qi is about your only option for long-term outside computing.

Sol Computer currently offers a number of different options, including tablets, a rugged netbook,  and the 10″ USB monitor. The netbook runs Windows, and the tablets are offered in Windows and Android. Price range from "you don’t want to know" to "you really don’t want to know".

Remember last December when there was all the doom and gloom about the decline in ereader shipments? Many blogs reported it as a sign of the end of the ereader market, but given the latest survey data from Pew Research Center that’s probably not the case.

According to the PRC over a quarter of Americans adults owned an ereader in January 2013. It seems that reports of the death of the ereader were greatly exaggerated.

This data comes not from the survey on American libraries or the report on US reading habits. Instead a helpful soul with the Pew Research Center pointed me at the reports and survey data that Pew has been gathering in their study of America’s mobile shopping habits.

The January survey data shows that 31% of Americans now own a tablet of some kind, be it iPad, Android, or iPad. That’s up slightly from the 25% who reported the same in November 2012. That is an excellent growth rate, even though it is far less spectacular than what was reported this time last year (from 10% before Christmas to 19% after Christmas).

But  never mind tablets; the important news today is ereader adoption. According to the most recent survey conducted in January, a full 26% of American adults now own an ereader. That’s up from the 19% who owned them back in November.

Let’s look at those numbers. According to the survey data ereader ownership got a 9 point bump last Christmas and a 7 point bump this Christmas. That’s not exactly what I would call a sharp decline, and it is not anywhere close to resembling iSuppli’s prediction that ereader shipments would drop by a third in 2012.

In fact, if we factor in the estimated sales in markets other than the US, for example the 1 million ereaders sold in Germany in 2012, I would not be willing to argue that ereader shipments dropped at all in 2012.

Furthermore, I think I now see why E-ink predicted in early January that ereader shipments would increase in 2013. They had probably already gotten early data on ereader sales over Christmas, and that data probably showed exactly what I just told you.

It seems that reports of the death of the ereader were greatly exaggerated. The hard-core readers and book buyers are still adopting ebook readers.  The numbers might not be going up as fast as before but they’re still going up.

I told you so.

via Pew Research Center

 image by gadl

When Random House launched 3 new digital-only imprints (Hydra, Alibi, and Flirt) last fall there was little information which could shed light on how they would be run. But if there is any truth to a letter the SFWA sent out to their members today then I think RH has a vanity press on their hands.

The Science Fiction and Fantasy Writers of America is now warning their members that any title published by one of the imprint, Hydra, would no longer be counted by the SFWA as a legitimately published work (more on this after the letter):

Dear SFWA Member:

SFWA has determined that works published by Random House’s electronic imprint Hydra can not be use as credentials for SFWA membership, and that Hydra is not an approved market. Hydra fails to pay authors an advance against royalties, as SFWA requires, and has contract terms that are onerous and unconscionable.

Hydra contracts also require authors to pay – through deductions from royalties due the authors – for the normal costs of doing business that should be borne by the publisher.

Hydra contracts are also for the life-of-copyright and include both primary and subsidiary rights. Such provisions are unacceptable.

At this time, Random House’s other imprints continue to be qualified markets.

Note: There’s no information on the website for these 4 imprints that confirms the terms that Random House offers to authors, but there is a post  on the Writer Beware Blog that lists basically the same terms and provides more details that reveal the contract is even worse than it first appears:

• It’s a life-of-copyright contract that includes both primary and subsidiary rights.
• There’s no advance. Net proceeds (defined as net income plus subrights income less the deductions detailed below) are split 50/50 between author and publisher.
• Deductions for ebook edition: "one-time out of pocket title set up costs" (editing, cover art, design, etc.), plus a "sales, marketing, and publicity fee" of 10% of net sales revenue.
• Deductions for print edition, if there is one: "actual direct out-of-pocket paper, printing and binding costs," plus 6% of gross sales revenue to cover freight and warehousing costs.

Update: John Scalzi got his hands on a contract from RH Alibi, and it is just as bad as the RH Hydra contract mentioned above.

So why is this a big deal? Well, you could look at the contract terms and be appalled, but the letter itself is an act of censure.

It has no real legal effect, but the market effect could be profound. The SFWA has stated, as a professional trade group, that the Random House Hydra imprint does not meet their standards of conduct for business ethics and that authors should not do business with RH Hydra.

Any title published by RH Hydra won’t count towards the the 3 short stories, 1 novel, or 1 screenplay that a writer must sell before becoming a member of the SFWA.

To put it simply, RH Hydra is now on the SFWA’s shit list. And that is a big deal.

This doesn’t happen very often, and the last time I know that a major publisher was censured was back in 2009. The RWA (Romance Writers of America) put Harlequin on their negotia non grata list after the publisher launched Harlequin Horizons.

Harlequin has always been a trendsetter, and in launching Harlequin Horizons (since renamed DellArte Press) this publisher was one of the first major publishers to directly take advantage of self-published authors by launching a vanity press. Like S&S-Archway or Penguin India-Partridge, Harlequin Horizons was owned by a respectable publisher but was (and still is) actually run by Author Solutions.

Harlequin was censured back in 2009 simply because Harlequin signed a deal with Author Solutions. The censure appears to have been lifted when Harlequin Horizons was renamed and any mention of Harlequin was removed from the site.

Don’t you wish the SFWA had done the same for all of Random House? I do.

In any case, Random House Hydra is officially on the naughty list.

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Ask anyone running the marketing dept of an ed-tech company and they’ll tell you that technology is going to fix every problem we currently face in public education. Never mind that past technology solutions caused more problems than they fixed, the new panacea will fix that too!

This same song-and-dance has been spouted by technologists ever since Edison claimed that films would make textbooks obsolete (I kid you not), and Today’s performance is being staged by Newscorp.

Joel Klein, the head of Newscorp’s educational division, unveiled the Amplify tablet today. This 10″ Android tablet is the focal point of a new educational platform whose goal is to move more money from the $500 billion K-12 education sector and put it in Newscorp’s pockets.

And I’m sure that Amplify will accomplish that goal.  In addition to the tablet, Amplify also sells a suite of educational tools that they believe teachers can use to improve student performance, monitor their successes, and turn everyone into an above-average student.

The software includes all the basic learning material that teachers need to dole out information on any given subject: Google Apps for Education, audio, video, games, online textbooks, multimedia lessons, reference books, a graphing calculator, and more.

The content is all reportedly aligned with the new Common Core educational standards that school districts across the US are currently working to adopt, and it even includes the highly popular Youtube-based lectures by Khan Academy , which coincidentally are now available in an iPad app.

Amplify has been testing the tablet in schools since October 2012, and they have refined both the hardware as well as the sales pitch.

The Amplify tablet is going to cost $299 and require a $99 a year subscription to access the content. There’s also going to be a 4G version, the Amplify Tablet Plus, which will cost $349 and require an additional $189 a year for the data plan.

In a way, this really comes as no surprise. Apple has led the way in getting tablets adopted in schools, with over 8 million iPads sold to schools since Apple launched the tablet in 2010. Apple’s other educational initiatives, including iBooks Author, have seen similar success with Apple reporting that iTunes U having hit 1 billion downloads earlier this week.

image by flickingerbrad

Here’s a fun little cartoon/infographic that compares some of the benefits of ereaders versus books with paper. It’s the work of Sylvia Liu, and she has graciously allowed me to repost it here.

Have you been cheated by Author Solutions or one of their many subsidiaries? There’s a New York law firm that wants to talk to you.

Update: And now that firm has filed their lawsuit.

I’ve just been given a link to a new notice posted on the website of Giskan, Solotaroff, Anderson, & Stewart, a Manhattan-based law firm that specializes in class action and commercial litigation. The law firm:

is currently investigating the practices of Author Solutions and all of its brands (AuthorHouse, iUniverse, Trafford, Xlibris, Inkubook, and Wordclay). Authors using Author Solutions have complained of deceptive practices, including enticing authors to purchase promotional services that are not provided or are worthless, failing to pay royalties, and spamming authors and publishing blogs/sites with promotional material.

They are seeking authors who have had negative encounters with Author Solutions. (Gee, I don’t think they’ll have much trouble finding them.) There’s no evidence yet that the law firm intends to file suit, but given Author Solution’s infamous reputation in the self-pub community I should think that a class-action lawsuit is inevitable.

This, folks, is what I had been waiting for ever since Pearson made it clear that they weren’t going to reform Author Solutions. That fly-by-night firm and their various brands have a history of questionable business practices that goes back for at least a decade, with some of the brands having been in operation since the late 1990s. Pearson acquired Author Solutions in mid-2012 for $115 million and have since used it to launch new self-pub services in partnership with Penguin India (Partridge) and S&S (Archway).

That firm has always been a class-action lawsuit waiting to happen but now that it is owned by Pearson there are some very deep pockets to go after. In fact, I would bet that this is just the first of many lawsuits currently in the works. This is just one firm that posted a public notice; I would bet that the rest are quietly reaching out to disgruntled ex-ASI customers via complaint boards and forums.

In the next few months we are probably going to hear about other firms which are also working towards filing class action lawsuits against Pearson/ASI. I have to say that I am looking forward to it; the lawsuits will be entertaining and stand as a warning to any of the other major publishers that are thinking about following in Pearson’s footsteps.

image by Ana Paula Hirama

Do you work in a paperless office? No? Then I have something for you.

Here’s an interesting Kinect hack that appears to have been developed last Fall but only came across my desk today. It seems a Japanese engineer has come up with a new use for the Microsoft Kinect.

As you probably know, the Kinect is a motion tracking accessory for XBox, Windows, and whatnot. It’s being used here to track the location of the trash as it is thrown in the air as well as the trashcan.

I’m not sure who created this smart trashcan, but I did find a "making of" video. The narration and subtitles are in Japanese, so my details are a little sketchy. But from what I can tell based on the video, that is no ordinary trashcan. It’s been hacked – turned into a robot, basically. In addition to motors, wheels, and a battery, there’s also a wireless connection so the trashcan can be controlled from a computer.

The operation of the smart trashcan is pretty simple. There’s an app running on the PC which takes the data from the Kinect, crunches it, and sends commands to the smart trashcan. The trashcan is maneuvered so it ends up below the piece of trash before the trash hits the ground.

Simple, yet practical.

But as cool as this is, what I would like to see is the next iteration of the idea. Rather than catch the projectile before it hits the ground, why not shoot it down?

I’d like to see this idea be adapted to include a foam dart gun like the one at right. It’s a USB powered dart cannon which incorporates a webcam. I can’t find a place to buy it online, but the thought that it might be used to shoot down trash has a lot of appeal.

found via eBookPorn

So 3 German booksellers, Deutsche Telekom, and Bertelsmann walk in a press conference … and announce they are going to be selling a new ereader called the Tolino Shine.

The Shine is going to bring generic ereaders to a whole new level. Its bland "me-too" design is based around the same HD E-ink screen found on the KPW and Kobo Glo. Like pretty much every other new 6″ ereader on the market, the Shine also has a frontlight, Wifi, and a touchscreen (IR).

This ereader has 4GB Flash storage, a microSD card slot, and claims up 7 weeks battery life. It is going to retail for 99 euros when it ships next week.

Edit: This ereader also has access to 25GB of online storage (provided by the Tolino platform).

All 5 Tolino partners (Thalia, WeltBild, Hugendubel, Deutche Telekom, and Bertelsmann) will carry the Shine in their 1,500 retail stores across Germany or on their website. eBooks will be provided via one of the 5 ebookstores maintained by the 5 partners. I am told that all of the ebookstores have been updated to switch them from their current platforms to a new one developed by Deutche Telekom. Some of the 5 partners have released reading apps, and in the near future those apps will also be updated to use the new ebookstore.

Readers will also be able to buy ebooks from the device itself as well as at Deutche Telekom’s 11,000 wifi hotspots across Germany. The new ebookstore boasts 300,000 German language titles.

So this is a Kindle killer? If you ask me, I think the Tolino partners forgot that in order to win you need to do something better than the dominant player or have some appealing feature that attracts users. I don’t see how the Shine meets those requirements.

Here’s a hands on video from lesen.net. Tell me if you think it looks like anything special:

And frankly, this is 2013. They’re not going to win the ebook market on hardware. And that goes double when you factor in the statistic that the global ereader market is shrinking, not growing.

Don’t believe me? Even what little stats I have on the German ebook market shows that I am probably correct. Last October BitKom reported that 11% of Germans read ebooks (9-ish million people). They predicted elsewhere that around a million ereaders would be sold in Germany last year (far fewer than the 12% of Germans who own a tablet). That leads to the obvious conclusion that most of those readers are not using a dedicated ebook reader. They read with an app running on a smartphone, tablet, or computer.

I would say it’s pretty clear that focusing on ereader hardware is a sub-optimal choice.

Let me know when Tolino has a plan to sell ebooks better than Amazon, because that is the point at which they might start winning. At this point all I can see is that they are making the same hardware mistake as everyone else.

Tolino

Apple has never been one to give specific details about how much content they are selling, so when I read today that an analyst with Asymco had released a new estimate of iBooks sales I was thrilled. Horace Dediu has a post over on the Asymco blog which claims that apple could be earning an nearly 2 billion dollars from iBooks.

If you take Mr. Dediu’s numbers at face value then iBooks could be quite profitable, generating $1.8 billion in sales and about $1.3 billion in payments to publishers, aggregators, and distributors.

That looks like a lot of money, but unfortunately the figure is bogus. It only took me a couple minutes to debunk it, and it turns out that absolutely none of the figures used by Mr. Dediu stand up under scrutiny.

First, Mr. Dediu arrives at the $1.8 billion figure by making guesses about the number of ebooks sold each month, and he also made a WAG about the average selling price. But let’s skip that and focus on the bigger error that Mr Dediu made at the very beginning of his analysis. Let’s see if you can spot it:

In June of 2011 Apple announced that 130 million ebooks were sold through iTunes. In October of 2012 it announced that 400 million sold.

If you’ve followed Apple news then you know they don’t announce the number of ebooks sold; Apple has announced the total number of downloads (example). That is not the same thing.

Downloads includes all the free ebooks that don’t generate revenue.  And if the statistic I found while writing about Amazon’s changes to their rules about free ebooks promotions was any sign, free ebooks outnumber paid titles by at least 15:1 and possibly as much as 100 to one (according to Smashwords).

So the short of it is the billion dollar figure that Asymco is reporting today is complete bunk. And that’s a shame because this was potentially a very hot story.

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Amazon released a new update for their Kindle app for iPad and iPhone yesterday but they don’t want you to install it. In fact, no one thinks you should install the v3.6.1 update: not me, not Amazon customer service, and especially not the couple dozen early adopters who are having issues.

Update: Amazon has fixed the issue in the v3.6.2 update. I installed it and it works fine.

I think this is the only time I have can recall having seen a change notice which mentions solely:

Note: There is a known issue with this update. If you are an existing Kindle for iOS user, we recommend you do not install this update at this time.

Amazon is not being alarmist here; there are early reports that this update is screwing with device registration, causing users to lose downloaded samples, purchased ebooks, and app settings, all because the updated app forces them to re-register their iThing as a new device.

Andrys Basten was the first to notice the numerous complaints in the Kindle Support Forums. As of 9am there are 17 complaints on Amazon’s website as well as another 193 (mostly negative) reviews in iTunes. Nearly all of the reviews are reporting the same issue, with varying degrees of detail:

I updated via App store upgrades to 3.6.1 on an iPhone 5. This version of the application did not preserve the device registration, and I was forced to re-register the device. I had book samples, which I use for my queue of new books to purchase, on the device. These were lost.

and

Exact same issue with 3.6.1. The upgrade made me re-register the iPhone as a new device and I lost a number of SAMPLE books – which is how I evaluate prior to purchase. I also had to re-download numerous books from Cloud to Device. I can live with the latter, but the former has not only caused me to lose a potential shopping list, it has also cost Amazon (and authors) revenue as I have no way to recover the Samples and no written record of what they were.

iTunes

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The Association of American Publishers has released a new monthly revenues report for October 2012, and if these statistics are any indication someone other than B&N has been selling a lot of ebooks.

The general book market was up 8.7% from $5.4 billion to $5.9 billion in the first 10 months of 2012, with only a few market segments reporting a decline (adult mass market paperbacks, adult & religious hardcovers and YA paperback). Children’s books in particular saw decent growth (18.7% overall), but ebooks continue to be the bright spot in the monthly report.

eBooks continue to exceed the grown of the rest of the market, with combined sales across all segments increasing by 46% ($896 million to $1.3 billion). Much of the growth can be attributed children’s ebooks (up 160%), which is still seeing the record breaking 3 digit growth rate that the overall ebook market experienced in 2009 and 2011, but the adult ebook and religious ebook segments are still seeing excellent growth (35.9% and 22.9%, respectively).

According to AAP’s publicly available stats, eBooks now account for  22% of the US book market. This change was accomplished in only 5 years.

image by Bill Ward’s Brickpile

When Amazon announced new restrictions yesterday on how their affiliate partners could promote ebooks, they said the new rules would only affect a fraction of a percent of affiliates.

Sadly, that is not true. The new rules are actually going to affect all Amazon affiliates, and  complying with the new rules is going to require the affiliates to do the impossible.

Amazon wants affiliates to control what customers do after they click a link and go to Amazon.

According to the new 80-20 rule (my name for it), Amazon affiliates will be penalized in any month that one, their affiliate ID shows up on more than 20 thousand free Kindle ebook purchases, and two, the total number of paid Kindle ebooks account for less than one in five purchases. If an Amazon affiliate can’t comply with the rule, they will lose their income for the month.

When that rule was revealed yesterday there was a lot of hand-wringing among the free ebook sites as well as among authors and everyone interested in promoting ebooks by giving them away for free.  There was a lot of discussion how this would kill most of the value in KDP Select (the optional free days is valued by indie authors as much as the KOLL payments). There was talk about how this would damage the ability of free ebook sites to promote ebooks while still covering the costs of running a website.

Update: Andrys Basten has pointed out that Amazon’s new rule might have 3 clauses, not 2. The first requirement for the 80-20 rule could be that the rule only affects sites that, in the opinion of Amazon, "are promoting primarily free Kindle eBooks". The rest of my post is now hinges on a drone at Amazon deciding on whether an affiliate fits under the first clause.  That does not exactly fill me with confidence. (Note: Other reports suggest that Amazon has said there are only 2 clauses.)

This is all true but we were thinking too small. You see, Amazon’s new rule counts all free ebook downloads, not just the ones linked to directly.

For example, let’s say you click on this link to Amazon and then get 5 free ebooks. Even though I didn’t promote one of those free ebooks, I am going to get dinged for all 5 downloads. They will count towards that 80-20 rule.

The problem here is two-fold. Not only could Amazon potentially penalize any affiliate, this rule also assumes that affiliates can control what Amazon customers do after they click the link.

The larger Amazon affiliates are but a single download frenzy away from going over the 20,000 limit. What’s more, this Sword of Damocles dangles over even the small and medium free ebook sites. Earlier today I heard from George Burke, the owner of eBookDaily, a 2-month-old free ebook site. According to George his site has now has 12 thousand active members. Under the new rule George is going to lose his Amazon affiliate fees in any month that the members average more than 2 downloads each.

I am only slightly kidding when I say that Amazon expects affiliates to practice mind control over everyone who clicks a link. Crazy, no? I’m still not sure how they expect that to work.

But the free ebook sites can always switch to promoting paid ebooks, right? That will get the average up and minimize the chance that they’ll violate the 80-20 rule, right?

I’m not so sure.

The problem with trying to encourage the average ebook buyer to pay for more ebooks is that the ratio of purchased ebooks to free ebooks is rather low. I have been told, and a second source confirms, that the average ebook buyer probably downloads 15 free ebooks for every one they buy.

Edit: My original source says that the ratio of free to paid acquisitions is even higher than 15:1 (that was old data).

Second Edit: Smashwords reported in April 2012 that they saw 100 free downloads for every paid ebook. Look at the slides here (slide #49).

That’s a 15:1 ratio, and in order to comply with the 80-20 rule the free ebook sites (and all other Amazon affiliates) will have to try to get Kindle customers to buy 4 ebooks for every free title purchase at least 1 paid title for every free one either by getting them to download fewer free ebooks or by getting the customers to buy 4 times as many ebooks as they buy now.

One possible solution is that they could switch to listing more paid ebooks. Many sites already list a lot of paid deals, so I’m not sure that will have much of an effect in changing people’s behavior. Affiliates could also stop listing free ebooks entirely, but there is no guarantee that it would have any effect on the downloaders.

In any case, the real problem here is that Amazon expects affiliates to control what happens after someone clicks a link.  I know it sounds crazy but that’s what Amazon wants.

If anyone can think of a solution, please share. Also, please feel free to point out the flaws in my reasoning.

If you ask me, I think Amazon should simply disallow affiliate links on ebooks.  It would be easier on the affiliates, but it might also be more damaging on Amazon’s bottom line.

Barnes & Noble made a similar move last March when they stopped paying affiliate commissions on Nook ebooks. I’m sure you can recall how badly they’ve been doing this past year in terms of Nook hardware and content sales.

Amazon probably won’t suffer quite so much of a slowdown in growth, but they are still creating an opportunity for one of their competitors to step in and start trying to take customers away.  Given that more people read on smartphones and tablets than on ereaders, this is a real possibility.

image by dqqd

We’ve long known that it’s possible to cheat your way to a better ranking in ebookstores by buying faked reviews, but did you know that you can pull off the same trick with a print best-seller list (even a list as prestigious as that of The Wall Street Journal)?

It’s going to set you back $60,000 to $100,000, but it can be done. What’s more, it’s an accepted practice that even publishers like Wiley have used from time to time.

The WSJ reported this week that a marketing company by the name of ResultSource has expanded their services to include rigging the best seller lists. They’ve developed a way to buy their way on to lists:

It isn’t uncommon for a business book to land on best-seller lists only to quickly drop off. But even a brief appearance adds permanent luster to an author’s reputation, greasing the skids for speaking and consulting engagements.

…

But the short moment of glory doesn’t always occur by luck alone. In the cases mentioned above, the authors hired a marketing firm that purchased books ahead of publication date, creating a spike in sales that landed titles on the lists. The marketing firm, San Diego-based ResultSource, charges thousands of dollars for its services in addition to the cost of the books, according to authors interviewed.

It’s not exactly a new phenomenon. Five minutes with Google found 6 different stories on gaming the best-seller lists (one, two, three, four, five, six), and I’m sure there are more examples out there.

If anything the only real news this week is that ResultSource can offer as a paid service what used to be very difficult to pull off on your own. They’ve taken the one-off scam of yesteryear and developed it into a system where they basically sell a spot on the best seller lists.

So how does it work?

ResultSource arranges to pre-buy 2,000 to 5,000 copies of a title in the weeks before it is launched. All those sales are recorded in Nielsen Bookscan in the first week that the title is available, so if the title in question is in one of the smaller niche markets (business books, for example) those several thousand sales can be enough to vault a book on to the best-seller lists.

And when it comes to business books, being able to claim the status of  best-selling author can be worth enough that the initial investment can actually pay off:

It isn’t uncommon for a business book to land on best-seller lists only to quickly drop off. But even a brief appearance adds permanent luster to an author’s reputation, greasing the skids for speaking and consulting engagements.

Mr. Kaplan (one author interviewed for the piece) says the best-seller status of Leapfrogging has "become part of my position as a speaker and consultant."

I’m sure it comes as no surprise that this scam has become an accepted practice by at least some publishers. A rep for Wiley even admitted to recommending ResultSource to a small number of business authors. "We view it as a marketing tool that targets sales and the timing of those sales," she said.

This scam works best on the best seller lists that use Bookscan data as one of their sources. The best-seller list maintained by The WSJ, for example, has probably been compromised numerous times by ResultSource, but other lists like that of The New York Times are more likely to be immune. The NYTimes creates its best seller list via a secret process, and that should make it more robust. Current industry common knowledge suggests that it’s based at least in part on book sales at select bookstores across the country. But no one knows exactly which bookstores, so the NYTimes list is safe, right?

Well, no. That list has been quite publicly gamed on at least one occasion in 1995.

So are there any lists you can trust? I doubt it. Amazon has been shown to fiddle with their best seller list, rendering their list (and the one from Digital Book World) suspect. And even Bookscann cannot be relied upon to report sales; ask anyone and they’ll tell you it has also long since stopped being an accurate reflection of the book market.

Are there any lists you can trust?

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 image by Martin Cathrae

Amazon has recently announced a change in the rules for their affiliate program. When those new rules take effect in March 2013 they’re going to make it harder for websites like eReaderIQ to cover their costs with affiliate commissions while still helping readers find free Kindle ebooks.

Ever since Amazon opened the Kindle Store they have been using free ebooks as loss-leaders. The free ebooks were used to draw in as many customers as possible in the hopes that they would stick around and buy more ebooks. And thanks to Amazon’s passion for encouraging affiliate marketing, a whole host of sites have sprung up to find and introduce you to those free ebooks.

Unfortunately that is probably going to change soon.

Starting on 1 March, Amazon is going to start checking to see if an affiliate is encouraging people to download "too many"  free ebooks, and if anyone who crosses over the threshold will lose the affiliate fees for that month.

The new threshold has 2 components. According to Amazon, they will block a payment to an affiliate for any month where:

1. At least 80% of all Kindle eBooks ordered and downloaded during Sessions attributed to your Special Links are free Kindle eBooks
2. 20,000 or more free Kindle eBooks are ordered and downloaded during Sessions attributed to your Special Links

Amazon says that fewer than a tenth of a percent of affiliates, and they could well be correct. But no matter how many sites are affected, what’s really going on here is that Amazon is closing a lucrative loophole in the affiliate program.

Loophole? What loophole?

Let me explain. There are a number of websites that direct you to free Kindle ebooks not because they want you to download the free ebook but because they hope that you’ll buy something else while on an Amazon website.

All of these sites are not using Amazon’s affiliate system for its intended purpose (advertising a product sold on Amazon), but to instead promote a free product in the hopes that they can pick up an affiliate fee or sales commission on a product they didn’t promote.

Amazon naturally thinks that the sites I describe above are gaming the system, and they’re not going to let the bigger sites get away with it anymore. Starting in March a website that promotes Kindle ebooks is going to have promote more paid Kindle ebooks or it won’t make any money in a given month.

Luckily this will only affect the larger sites, and possibly not even all of them.

Amazon

Thanks, Jeremy!