RicDay on Publishing

In book publishing, there is a traditional division of labor. You find authors and work with them to make their books print ready. You contract out printing, and you contract out distribution. Sales, marketing, and publicity may be done in-house or contracted out. Now your world is being changed by e-books, what should you do?

Some elements of the business that are potentially changed by e-books:

Printing Books

You don’t print e-books. You generate them using software — generally, the same software which you use to prepare your files for the printer. So there is little reason to contract out the production of your e-books.

You may want to contract out the conversion of back list titles, because you probably do not have them in a format which will allow quick and easy in-house conversion, but creating your own e-books at the same time you create your printer files for new titles makes a lot of sense — your production costs drop dramatically.

Distributing Books

You probably do not handle your own distribution. Professional book distributors running efficient warehouses can do things you cannot. The better ones aggregate small orders for books from individual clients into larger, more cost-efficient shipments, thus better serving both the individual publisher and the individual retailers who want to order one of this and two of that.

Distributors also manage the bane of the book business, returns. They manage the returns process, identify damaged items and remove them, and put back into distribution those returned books that are in good condition.

Finally, distributors provide you with detailed accounting reports of sales, returns, stock positions, and all the other data you need.

E-books are not physical items, so physical distribution is not an issue. Digital goods have traditionally been sold on a no-return basis; there is no good reason why publishers should accept returns of e-books.

There is no good reason why your e-books need anyone except you as their distributor.

Selling Books

We have relied mostly on brick and mortar retailers to sell our books for the past couple of centuries. It has not been a great experience, for retailers or publishers.

In very recent times, we have witnessed and participated in the arrival of a new retail approach: selling via the Internet. When this began, a little over a decade ago, a few adventurous retailers and publishers began experimenting with websites designed to sell books.

Conflict arose immediately. I recall one brick and mortar chain owner rather stridently warning local publishers that if any of them began selling books on their own Internet websites, she would return all their books from her stores and stop carrying them. Many local publishers complied with her instructions, with the result that many are only now, more than a decade later, starting to dip their toes into selling on sites that they designed as catalogs.

That arrogant retailer went out of business in a fairly spectacular financial collapse half a decade ago.

Since those days, Amazon has grown to be the world’s largest book retailer. It recently achieved the final benchmark, overtaking Barnes & Noble to become the largest book retailer in America.

Amazon has grown to the monster it is today by setting up shop in multiple countries, aggressively testing and tweaking its websites to optimize sales, and discounting books far below levels that most brick and mortar retailers can sustain (Costco may be an exception).

When it has felt threatened, Amazon has pressured publishers. A good example happened recently, when some British publishers began aggressively discounting their books on their own websites, to try and counter the fall in sales at retail as the recession bit. Amazon warned them that if they continued those discounts, Amazon would arbitrarily deem the lowest price offered on the publisher’s site to be the retail list price for the book, and would adjust its web prices and what it paid the publishers accordingly. The publishers backed off.

E-books are also sold by Amazon, but in a way that gives the company full control of the product: Amazon provides the delivery mechanism (the websites), the reading device and software (the Kindle and mobipocket software), and the digital rights management tools to tie everything together and lock it up tightly.

How should you sell your e-books? I think you should make them available in as many venues as possible. Amazon is far from being the only viable outlet for e-books, and I think the company’s focus on trying to make the Kindle the dominant reader will fail. I also think their tight DRM approach with their mobipocket software will fail. At best (from Amazon’s perspective) the Kindle with mobipocket will be just one element in a much larger universe of reading devices.

Apple’s App Store is an outlet with enormous potential. There is no question that iPhone and iPod Touch users are a significantly bigger audience than are Kindle users. As the Stanza reader migrates to the Blackberry, Android, and other smartphones, and is available as a desktop application for PCs and Macs, that market looks likely to run away with the game.

Sony, Irex, and the various other makers of readers for e-books are not out of the game, either. They do not get the star treatment the mass media afford the Kindle, but they are selling significant numbers of reading devices to affluent consumers who like to read.

Sell e-books on your own website and encourage reader feedback so you can learn what your customers like and (more important) what they dislike. Put affiliate sales software in place on your site and encourage independent booksellers to sell your e-books through affiliate links, letting them have a piece of the action.

Foreign Rights

I have mentioned this elsewhere, but selling e-books on the Internet means selling to the world, and not just to the consumers in your back yard.

We sell foreign rights to other publishers because distributing physical books outside North America is too expensive to make good business sense. This restriction does not apply to e-books.

In a world without borders (the Internet), who needs foreign rights? There is nothing more aggravating than to log onto a site which sells e-books, find an e-book you want to purchase, and discover it is “not for sale in your country.” I have had this happen enough times in recent months to realize that a number of large American publishers are treating their e-books exactly the same as their print books. Presumably their Canadian branch is assigned the rights to those books they won’t sell me, but their Canadian branch does not have an e-book store I can buy from.

We still need rights agreements for physical books and I don’t see that changing in the near future. But we definitely do not need to sell foreign rights for e-books (I am not talking here about translation rights). There is no good reason that I can think of, to not sell our e-books to whomever wants to buy them, no matter where they are.

For the first time since high volume printing of books began in China and Korea more than 12 centuries ago, we have the ability to sell books globally at a single price point, eliminating delivery costs. The world, quite literally, is our new market.

Conclusions

Once you remove the costs of printing and distribution from book production, and start selling on a global instead of a national basis, you have the opportunity for larger volume sales, lower selling costs, and a larger market to sell to. Even if you harbor doubts about the long-term market for e-books, this is an equation which strongly suggests you should be at least trying it.