Amazon’s Exclusive New Publishing Deal Threatens to Fracture E-book Market

Just a few minutes ago, I received a tweet from Mashable with the news of Amazon's new and exclusive publishing deal. I could not help but retweet as well as re-publish on this blog. All of us involved in book sales and publishing need to take note of the deals taking place in the market. Who knows what might happen next? The piece by the way was written by Lauren Indvik and can be found here: http://bit.ly/bDIww1

Anyway, here is the piece in its entirety:

The Wylie Agency has signed a deal to bring the e-book editions of 20 classic titles, including Vladimir Nabokov’s Lolita and Ralph Ellison’s Invisible Man, exclusively to Amazon’s Kindle Store for two years, the company announced Thursday.

Publishers were, unsurprisingly, less than pleased. Today, Random House declared in a statement that the trade publisher would “not be entering into any new English-language business agreements” with the agency, which represents such illustrious authors as Martin Amis and Salman Rushdie, “until [the] situation is resolved.”

“The Wylie Agency’s decision to sell e-books exclusively to Amazon for titles which are subject to active Random House agreements undermines our longstanding commitments to and investments in our authors, and it establishes this agency as our direct competitor,” a spokesperson for the publishing company said.

The problem is that it’s still unclear — at least to Random House — who has the rights to publish the electronic versions of older titles, whose contracts don’t specify those rights because e-books simply didn’t exist when they were drafted. Random House sent a letter to literary agents in December 2009 asserting ownership of those rights, citing clauses in older agreements that allow the company to publish texts “in book form… in any and all editions.”

Agents and authors were surprised to receive the missive, given the outcome of a lawsuit between Random House and RosettaBooks LLC in 2001. According to the WSJ, Random House tried to prevent the latter from selling the e-book editions of works by William Styron, Robert Parker and Kurt Vonnegurt Jr.; the U.S. District Court for the Southern District of New York ruled in RosettaBooks’s favor, claiming that Random House’s earlier contracts didn’t cover e-books. A federal court of appeals affirmed the decision.

The Future of E-book Distribution

The latest dispute between the Wiley Agency and Random House is, then, just one in what promises to be a long line of disagreements — and not just about older titles. Perhaps inevitably, authors and their agents will increasingly make deals directly with the likes of Amazon and Barnes & Noble’s e-book division to distribute the electronic versions of their work.

Several, including Stephen King, already have. The bestselling suspense author released his most recent novel, Blockade Billy, as an e-book one month before releasing the hardcover version in the U.S. and Canada. He also distributed a short story, “UR,” exclusively through the Kindle Store in February 2009, shortly after the Kindle 2’s release.

Most recently, widely read Japanese author Ryu Murakami revealed his plans to publish his next novel on the iPad, stepping around his publisher and securing a greater share of the sales revenue in the process. According to Fast Company, publishing houses typically offer authors and agents 25% of the net proceeds of e-book sales. By releasing his novel directly in Japan’s App Store, Murakami and his partners will receive up to 70% of sales proceeds; undoubtedly, bestselling authors could negotiate with Amazon, Barnes & Noble, etc. for even more lucrative deals.

It thus makes sense that authors and literary agents wouldn’t want to fork over e-book rights to their traditional publishers, when they could potentially profit more by making deals directly with e-book retailers. And traditional publishers are of course worried, as e-book sales are making up an increasingly greater share of overall sales; earlier this week, Amazon revealed that it is now selling more e-books than hardcover books.

What This Means for Consumers

In the end, however, it’s the consumers who will suffer most. While it’s great that 20 works of classic contemporary literature are now available in electronic format for Kindle owners, it’s not so great for those with a Nook, iPad or one of Sony’s or Borders’s low-priced e-readers.

Unless different arrangements are made, consumers can expect a frustrating future in e-book purchasing, in which popular titles and authors are made available only on certain platforms — at least until a set number of copies are sold or period of time elapses, at least. Amazon and its ilk will offer increasingly competitive deals to secure top selling authors, and users will have to toggle through an array of apps and devices to download the books they are looking for.

As Devin Coldewey of Crunchgear cheekily suggests, consumers may return to the “portable, DRM-free, region-agnostic” paperback for convenience’s sake.

Who do you think is in the right here, Random House or the Wylie Agency? Do you think the dispute and other recent developments bode well or poorly for the future of the publishing industry? Share your thoughts in the comments.

 

Image is courtesy Farm3 on Flickr (http://bit.ly/aAyndv)

If eBooks Are the Future, Do Publishers Have a Plan?

Written originally in November of 2009 by Linda Dishman, the question does need to be asked, what now for publishers? I believe the question has not been answered. However, I believe that the question will be answered in a way most of us have not imagined. Here is where you can find the original piece - http://www.fastcompany.com/blog/lydia-dishman/all-your-business/are-ebooks-brave-new-world-profitability-publishers. Enjoy the piece: 

The numbers are in, and eBooks may very well be the bright spot in book publishing's dim future--but only if publishers can figure out a way to keep the momentum going.

EBook sales accounted for $46.5 million as of the end of September, according to the International Digital Publishing Forum (IDPF), but that number only represents trade eBook sales through wholesale channels. Retail numbers may be as much as double these figures due to industry wholesale discounts, says IDPF. It's a drop in the bucket for book sales overall, which amounted to about $1.26 billion for the month of September, according to the Association of American Publishers (AAP).

What's most astonishing, though, is that eBooks have sold like hotcakes without a marketing or sales strategy. Publishers are moving quick to catch up as new digital innovations come to market.

"Everybody's awake now," says Mike Shatzkin, a 40-year industry veteran and founder of the Idea Logical Company, a firm of digital publishing futurists. He lauds larger publishers such as Random House and Hachette for being way ahead in terms of the mechanics of getting eBooks to market. But one of the publishers' biggest problems, he says, is that their selling strategies are built around book formats, and not about the interests of the people reading those books.

Brian O'Leary, founder of Magellan Media, a publishing industry consultancy, agrees that the approach to finding the eBookworms varies from publisher to publisher. For instance, he notes many of Hachette Book Group's titles have had simultaneous print, audio, and e-book versions that are marketed and sold using common campaigns.

HarperStudio's publisher, Bob Miller, acknowledged that their overall strategy so far, is integrated with their print program because many of their eBooks and digital audiobooks have traditional print versions. This from the HarperCollins imprint that rocked the publishing world recently when they announced a 50-50 profit-sharing deal with authors--a departure from the traditional 7% to 15% royalty-- and publishers of the multi-media "Vook" CRUSH IT!

Miller speculates that commercial fiction categories such as thriller, mystery, suspense, romance, and science fiction will continue to sell briskly in digital format. "Readers of these genres will continue to like the convenience and low cost of this format and are less concerned about having the physical book to keep on a shelf," he says.

But O'Leary suggests publishers such as HarperStudio would do well to take a page from the genre publisher's playbook. Though he's not advocating a one-size-fits-all marketing strategy, he notes that Harlequin has enjoyed much success by marketing short-form digital downloads for Nocturnal Bites separately, and recently announced the start of a digital-only imprint.

Indeed, Harlequin Enterprise Ltd.'s Brent Lewis, vice president of digital and Internet for Harlequin Enterprises Ltd., has been leading the strategic charge of Harlequin's digital publishing and marketing programs that now reach over 50 million readers in ebooks and digital audio, as well as on Harlequin's own site, in mobile distribution, and digital-only content.

Lewis' revealed Harlequin's not-so-secret ingredient in an interview with Fast Company last year: their consumers. "At Harlequin we have a very powerful brand that people have been very loyal and engaged to since the business began."

While Harlequin has its finger on the (ahem) throbbing pulse of its readers, it will be interesting to see what strategies evolve at Random House when industry vet and ex-Amazon employee Madeline McIntosh assumes the newly created position of President, Sales, Operations, and Digital on December 1. Her appointment will "unify their physical and digital sales efforts for adult, children's, and international titles, distribution, publishing operations, IT, and corporate digital-publishing capabilities in an interconnected team,"according to a statement from Markus Dohle, Random House chairman and CEO.

They managed to pull out a blockbuster under current leadership. Crain's New York Business reported sales of Dan Brown's The Lost Symbol sold 100,000 e-books its first week out, or about 5% of total sales for the book. September ebook sales at Random House (much of which are presumably The Lost Symbol) pulled in $22.6 million, which is a 700% increase over Kindle sales last year. While every month can't be a Dan Brown blow-out, a good marketing strategy to find and retain loyal readers will help shore up the revenue model.

Right now, Shatzkin says eBooks are more profitable than print because there is no physical inventory, and in many cases the publisher has negotiated lower royalty payments (and other than the aforementioned specific instances, no one seems to have a marketing plan). As such, he believes Amazon, proprietors of the Kindle eReader, is subsidizing publishers for digital editions because the price they are paying up front for a digital edition is the same as for the print version.

O'Leary believes this too, will change. As publishers gain experience and sales grow, the cost of creating them will fall. "In the last year retail prices for e-books have been set lower than their print counterparts. If those lower prices stick, they will leave little room for retailer or publisher profitability under the traditional publishing model," he adds.

Yet Shatzkin wonders whether good marketing strategies and proper branding of digital books won't keep them from being cost prohibitive to the consumer. "There is plenty out there to read that's free. Will the public plunk down $25 for Ted Kennedy's eBook?" he asks, then responds, "I think it will take a while to answer that question."