Monthly Archives: March 2013

Why Didn’t Someone Else Buy Goodreads Before Amazon?

30 March 2013

From James McQuivey on Forbes Blogs:

I fell asleep on a train yesterday and missed one of the most noteworthy events of the week: Amazon acquired Goodreads.

. . . .

I’ll do my best to be objective in answering all the anger being expressed on Twitter and in the trades when I point out that Goodreads was not saving itself for Amazon like some virginal tribute. It has been sitting there, all along, waiting for the right offer to come along. That’s how venture capital works, people.

. . . .

I have an important question to ask, one that I am stealing from author Nick Harkaway (@Harkaway) who wrote this on Twitter the morning after:

The point isn’t that Amazon bought GoodReads. The point is why GoodReads wasn’t snapped up by a publisher years ago.

The obvious reason is that based on the rumors of a purchase price in the “low eight-figures” as some are confidently whispering, most publishers weren’t really in a position to buy Goodreads. Unless they had seen this coming and had bought it many years ago. Let’s say back in 2010, when I first urged one of the Big Five (are there five now?) publishers to buy it.

. . . .

Digital disruption is built on — and therefore requires — direct digital customer relationships. Publishers haven’t had direct relationships of any kind historically — in fact, they are the first to admit that their customer was the book buyer at Barnes & Noble. This used to be a good thing until digital disruption came in and made it not so much a bad thing as an old thing. In the race to grab a customer relationship publishers have worked hard to build pages on Facebook, they’ve tried to reinject energy into their genre portal sites (Suvudu.com, anyone?). But none of them have managed to create anything as powerful and as useful to both themselves and to readers as Goodreads.

Only with a direct digital customer relationship can you learn from the customer in real-time, rapidly expand your total product experience, and easily offer new benefits to your customer.

. . . .

In each case, the solution to keeping up with digital disruption is to have a customer relationship, one that digital tools and platforms make incredibly cheap and increasingly powerful. Goodreads is one such tool. It still is, by the way, even now that publishers will be wary of it. And so I’ll offer this one piece of advice to publishers who may now feel like they should back away from Goodreads for fear that they are sleeping with the enemy: Don’t do it.

Link to the rest at Forbes Blogs

Neelie Kroes Wants to Make Europe the Home of eBooks

30 March 2013
Comments Off on Neelie Kroes Wants to Make Europe the Home of eBooks

From Good EReader:

In 2010, Neelie Kroes became the Vice-President of the European Commission responsible for the Digital Agenda for Europe. She has been a staunch advocate of eBooks and their accessibility for all citizens. She gave a talk in Salon du Livre, yesterday on the future of publishing in Europe.

Publishing in Europe has a long and storied history, for hundreds of years many companies have been in business producing some of the great literary works. Modern companies are facing a crisis because they are failing to adapt to the digital landscape that is starting to catch on in a big way. She mentioned “I know some see the advent of digital as a threat to the sector. But for me the biggest risk is that we fail to take advantage of new possibilities. Unless we embrace the future, the sector will for sure fall behind, overtaken by more forward-looking and dynamic parts of the world; overtaken by those who can look ahead and grasp the future. Then we will let down our economy, our people, and our cultural heritage. And as it stands we are not sufficiently taking advantage. We are not taking enough risks. In the US, eBooks are about one quarter of book sales; in only one European country does that figure go above 2%.”

. . . .

Neelie thinks that publishers have to think bigger then they are.”When competing with the American giants, piecemeal national initiatives won’t cut it. We need to think European to compete globally. Specifications and standards can help: for example, by supporting interoperability and portable eBooks. ePub is just one example. Most readers expect to be able to access their books in whichever country they are, and on whatever device they choose; if European publishers can’t meet those expectations, consumers will vote with their wallets; or go to the big American companies who can offer that kind of scale.”

European licensing remains a murky issue, for hundreds of years publishers have been printing books in their own countries and seldom exporting. Most scenes in France, Spain and Germany don’t translate that well to other countries and seldom do they see localization for your average title. Being able to market your books and gain the necessary permissions of the publishers to sell digital content to any country in Europe is something the industry has to strongly consider to develop a cohesive solution. There is also many different variations of VAT.

Link to the rest at Good EReader

The Logic Behind Self-Publishing

29 March 2013

From Kristine Kathryn Rusch:

Every morning, I read two or three newspapers on my iPad. One of those papers,The Los Angeles Times, has continued to showcase an editorial about the “death” of the self-published author. (I refuse to link to this thing; look it up yourself if you’re curious.)

Okay, the article’s not really the death of the self-published author. But the stupid piece, which I have clicked on three days in a row because I was tired and I didn’t recognize the headline, claims that because e-book growth has slowed in the last few months, self-published authors will never reach the pinnacle of success that they all dreamed about a short year ago.

. . . .

Hugh Howey is not the only writer to make a print-only deal with traditional publishers in the past six months. But his deal is the most watched. Everyone is looking at his deal to see if it can be replicated, and the timing couldn’t be worse for other writers who want print-only deals. Publishers are going to claim that Howey’s print books aren’t selling to expectation and no one will admit the reason why.

The reason? Howey’s print book got released by S&S on March 14, just as S&S began a war with Barnes & Noble.

. . . .

In the middle of this dispute, Barnes & Noble has demonstrated its clout by cutting back on the number of titles it has ordered from S&S. The publishing industry is screaming about this, because at the moment, B&N accounts for 20% of “consumer book spending and is a main conduit for publicizing new releases.”

. . . .

When you have middlemen, and they have businesses to protect, they have their own conflicts that have nothing to do with the product that they theoretically represent.

The writers who will get hurt the most are those whose books are being released in the first part of 2013 by Simon & Schuster, and that includes Hugh Howey.

Whatever S&S’s projected sales figures for Wool are, those sales figures won’t get met. If S&S is smart, they’ll accept that those numbers will be lower—that all of their sales numbers—will be artificially low this quarter, and they won’t make business decisions with those authors based on the artificially low sales numbers.

And pigs will fly out of my butt.

. . . .

And you know who is really being hurt here? Readers.

Because traditional publishers treat books like produce. So the books being released this quarter by S&S have only a few weeks to make an impression on the publishing world. If 20% of consumer spending occurs at B&N and S&S’s books aren’t there, then S&S’s books in this quarter will sell quite poorly.

Sure, a reader can get that book from a different retailer, probably with no problem. (Note to B&N: Great way to drive your customers to your competition. Just sayin’.)

But the future is the problem here. It sounds like Jodi Picoult is on top of this thing, doing signings and such to make up for that damaging loss in sales. However, most writers want to be “a writer, not a manager” to quote Charles Stross from this past week. Those writers are willfully naïve about the business of writing.

. . . .

Here’s the impact: When a first-time author negotiates her second-book contract with S&S, S&S will claim that sales were not to expectation and either not buy the next book or will low-ball the offer. And then will ship the same number of copies that got sold in this crisis period, so sales will continue to decline.

The same decline in sales will happen to a long-time author, and even to the bestsellers for S&S for the same reason. S&S will look at the sales figures for the previous book’s release and claim they were “disappointing” and will make the offer on those numbers.

That’s how it’s done in traditional publishing.

Will S&S admit that the low sales are its fault? No, nope. Not at all. Never.

. . . .

And believe me, some writers who are being published by S&S in the first quarter of 2013 won’t be able to make another traditional publishing deal under the same byline when the current contract ends.

Why don’t publishers care more about this? Why doesn’t S&S?

Because they publish thousands of books per year. If some books get caught in a dispute with B&N, so be it. If S&S wins this dispute, and gets better terms from B&N, then S&S will count this negotiation as a win.

. . . .

Why would writers self-publish in this climate? Because that way, the writer won’t get caught by someone else’s business dispute.

Link to the rest at Kristine Kathryn Rusch and thanks to Ant and others for the tip.  You should definitely read the whole thing.

Passive Guy will observe that when an industry is contracting (and traditional publishers and their bookstore distributor system are definitely contracting), a couple of things happen.

1. Nobody wants their part of the pie to get smaller. Somebody else should take the hit.

2. The power relationships between major players in the declining industry change. However, nobody is quite sure exactly how much those power relationships have changed, so a discovery process happens to determine who still has how much power.

That’s what the Barnes & Noble/S&S fight is about. Does Barnes & Noble have the power to increase its charges to publishers? Barnes & Noble thinks S&S still needs it to move enough printed books to stay profitable. S&S thinks visibility and distribution in Barnes & Noble is important, but not quite that important any more, certainly not important enough to pay Barnes & Noble a bunch of extra money.

When the change is based on disruptive technology, that change can happen very quickly, so last quarter’s power relationships may no longer apply today.

This is not the last battle over the shrinking publishing pie. We will see many more.

When the dinosaurs are fighting each other, smart mammals stay out of the way. In the future, the dinosaurs will be gone, but, as Kris explains, in the mean time, their battles can still harm a lot of innocent mammals.

PG has lost track of the number, but avoiding dinosaur battles is either reason number 88 or 89 for authors to self-publish.

 

LibraryThing: How to succeed in an Amazon/Goodreads world

29 March 2013

From Tim Spalding at Library Thing:

As you may know, Amazon recently bought Goodreads.

. . . .

First, this is GOOD NEWS. I’ve been wanting this forever.

1. When startups get bought they slow down or worse. When Amazon bought Shelfari, our other competitor, it just languished. Not a few big purchases have ended up in ruins. I don’t think Amazon will bungle Goodreads—I’d analogize this more to Amazon’s purchase of Zappos—but there’s going to be an effect.

. . . .

2. Amazon/Goodreads realigns friends and enemies. Publishers are desperate to find a way out of the Amazon trap–needing Amazon, but also competing more and more with Amazon’s own publishing operations, and finding their individual and collective power declining as Amazon’s grows.

. . . .

3. Users are restless. While outright Amazon hatred is a minority feeling, it’s a real one, and something LibraryThing can benefit from.

. . . .

At the same time, it’s well known that Amazon has an indirect but real stake in LibraryThing—they bought Abebooks, who were our first minority partner. People keep reporting that Amazon has 40%. That’s simply not true—it fails to take account of our second funder, Bowker.

. . . .

But this certainly muddies the message. For what it’s worth, I want LibraryThing to make more money, and therefore my, Bowker and Amazon’s stake to be worth more and more, but with Amazon now holding 100% ownership of BOTH our competitors (Goodreads and Shelfari), we can hardly do so without emphasizing what sets us apart.

Link to the rest at Library Thing

PG doesn’t think he would be happy if Amazon announced the purchase of his largest competitor.

Fanaticism

29 March 2013

Fanaticism consists in redoubling your effort when you have forgotten your aim.

George Santayana

Goodbye Goodreads – How Amazon will ruin a Good thing

29 March 2013

From Jarek Steele, owner of Left Bank Books in St. Louis:

Here’s my message for Goodreads –

Really, Goodreads?  You’ve forsaken all the other opportunities to partner with independent bookstores, Kobo, even Barnes & Noble & the Nook?  How about iPad?  Also, who at Amazon has a love of books or authors?

And who, for the love of all that is good in the world, will FINALLY notice and successfully challenge Amazon’s blatant attempts – and dare I say it, success – at monopolizing an entire industry?

I’ve had my issues with Goodreads before, and truthfully I’ve been way too preoccupied with running my own bookstore to spend much time reviewing books for free for a company who will then use those reviews to sell books somewhere else.  Back when I started my Goodreads account, I noticed that you couldn’t remove the Amazon link from the places to buy the books, but I did settle with including Indiebound and my bookstore among them.  Heck, I even started a Goodreads account for the store and encouraged – yes, that’s right Otis and Elizabeth, encouraged – the booksellers who work with me to review books there so that we could feature those reviews in their staff pick pages on our website to, you know, sell books.  We actually talked about it at staff meetings there for a while, looking for ways to better incorporate Goodreads into our ways of recommending books because you had a pretty cool idea.

I’ve now deleted all the accounts to which I have administrative access.

. . . .

You just turned your back on another, more interesting crap-load of readers who use Kobo and Nook and have zero interest in Amazon’s app, Kindle or other godforsaken tool.  And this particular crap-load of readers actually spend more money per e-book, and have stronger loyalty to libraries, independent stores and other bricks and mortar stores – an attitude which, incidentally, nurtures books and reading in a way that selling your reader information to the biggest of all Big Brothers just doesn’t do.

Link to the rest at Jarek Steele and thanks to Rob for the tip.

New York high court upholds state’s ‘Amazon tax’

29 March 2013

From Reuters:

Amazon.com Inc and other out-of-state online retailers must collect state tax on New York state customers, the state’s highest court ruled on Thursday, a decision at odds with other courts that could set the stage for a showdown in the U.S. Supreme Court.

. . . .

“The ruling by the New York Court of Appeals conflicts with both the U.S. Supreme Court’s precedents and with contrary decisions by other state courts that have looked at the same issue,” an Amazon spokesman said by email.

. . . .

Eight other states have passed legislation similar to New York’s, which requires out-of-state retailers to collect sales tax even when they do not have a physical presence in the state, but do have affiliates in the state.

Retailers with a physical presence in any state must always remit sales tax on purchases made either in a store or online, but since a 1992 Supreme Court decision, Quill Corp v. North Dakota, retailers lacking a “nexus” of operation in a state have not been required to collect sales tax.

Link to the rest at Reuters and thanks to Joshua for the tip.

Passive Guy has blogged about this topic several times. In addition to a reprise of his earlier comment below, he’ll talk about an unreported aspect of this issue.

Virtually all of the press reports on this issue focus on Amazon and other large etailers.

What is missed is the potential impact on very small businesses that operate online, including authors who sell their own books.

If I operate an online business from my home in Iowa, I may be able to figure out Iowa’s sales tax laws so I can collect sales tax from my Iowa customers.

However, keeping track of New York’s far more complex sales taxes is a whole different issue. Multiply that by 48 other states and it becomes overwhelming.

Consumers may assume that sales tax is a straight percentage of the amount of the sale, but it’s much more complicated than that. In some states, there are state, county and city sales tax rates that vary depending upon the location of the sale. A sale that takes place inside a city’s boundaries generates a different sales tax than one that occurs across the street in an unincorporated area. The zip code won’t tell you what sales tax rules govern the sale.

Many states have different sales taxes depending upon what type of product is being sold and there can be dozens of different product categories. Fresh vegetables may have a different sales tax rate than frozen vegetables.

Sales taxes at a physical store involve only a single set of state, county and city sales taxes based on its location. The store’s owner has to keep track of only one set of product-based tax rates.

Making a small home-based business in Iowa responsible for every permutation of sales tax for every location in the United States where one of its customers might live is extraordinarily unfair. Subjecting this Iowa business to the threat of a sales tax audit requiring an in-person appearance in Hawaii is an enormous burden on interstate commerce.

Here’s PG’s prior comment from 2011 on the legal aspects of forcing sellers to collect sales taxes:

Passive Guy understands political types trying to find new sources of tax revenue wherever possible, but Amazon and other well-managed companies stay competitive by managing costs very carefully. One of those costs is the cost of taxes.

The US Supreme Court has ruled on this sales tax issue on more than one occasion. The fundamental rule their decisions have established is if a company does not have a physical presence in a state – sales office, warehouse, etc. – the state does not have the constitutional right to require the company to collect sales taxes. There has to be a definite link, a material connection, between the state and the person or entity it seeks to tax. (Acknowledgement to lawyers: There are both due process and commerce clause principles here, but the opinion does a mashup with them and admits they’re mashed.)

If I live in California and drive across the border to Oregon (which has no sales tax) to buy a book from an Oregon bookstore with the intent of taking the book back to my home in California to read and keep in my bookcase, is there any basis for California to collect a sales tax from the Oregon bookstore?

No.

Even if the Oregon bookstore is right across the state line and has a big sign inviting visitors from California to buy books without paying sales tax, no one would contend the Oregon bookstore should pay a sales tax to California.

What am I doing if I sit in my home in California and order a book from Amazon?

If Amazon offered phone sales, I would place a call and speak with an order-taker in Washington. Since I’m using my computer, I’m electronically traveling to Washington and making a transaction on an Amazon computer sitting there. I’m buying a book in a Washington bookstore and paying for it there. As part of that transaction, I ask Amazon to give my book to UPS or Fedex, neither company related to Amazon, so one of these companies can bring the book I’ve purchased across the California state line to me.

PG will note in passing that one of the potential consequences this rule guards against is the likelihood that state legislatures will arrange taxes that overtax out-of-state businesses to provide competitive advantages for in-state businesses.

What about Amazon’s civic responsibility?

Amazon has a civic responsibility in Washington, where it has offices and employees and in other states where it has offices and employees. Just as a California resident doesn’t have a civic responsibility to pay taxes in Texas, Amazon doesn’t have a civic responsibility to pay taxes in California.

Where is the civic responsibility for these unpaid taxes? Every state that has a sales tax has a corresponding use tax in the same amount. If I live in California, purchase a taxable product and don’t pay California sales tax on it, I’m supposed to pay California use tax on it. Because I live in California, there’s a clear taxable connection between me and the state.

One question I never hear asked of any of the Californians or residents of other states who are complaining about Amazon not collecting sales taxes is whether these complainers have calculated and paid state use taxes on their purchases from Amazon since 1995.

Back to my original premise – Efficient and well-managed companies watch all of their costs very carefully. I doubt any of Amazon’s owners would suggest the company pay income taxes twice as large as it owes under federal and state law. So far as I know, Amazon pays all taxes it owes everywhere it owes them. Sounds like good civic responsibility to me. Because Amazon is well-run, it’s going to pay a lot more taxes in 2011 than Borders will.

Here’s a link to the most recent Supreme Court decision that directly addresses the issue these protest groups are raising.

How much money have the California Alliance for Retired Americans, the Health and Human Services Network of California, Health Access, the Western Center on Law and Poverty, the California Immigration Policy Center, the California Partnership and the Think Before You Click website people paid in the State of Washington in 2011 or the State of New York or the State of Michigan?

Michigan is certainly having financial problems. Wouldn’t civic responsibility dictate that all these groups pay some taxes to Michigan to help out the elderly and poor in that state?

Non-profit groups, you say? Oh, that means they don’t pay taxes to help the elderly and poor in California, Washington or anywhere else. Who could set a better moral example for Amazon?

Let’s move from legal principles to naked self-interest.

The only reason we have a jolly community of indie and almost-indie authors here at The Passive Voice is because Amazon made it easy for us to self-publish and sell on the world’s largest bookstore. Unlike almost every other bookstore on the planet, Amazon threw its doors open to indies. Others followed.

The only reason indie sales make it possible for some authors to live well from their indie royalties and many more to see a vision off in the distance of a time when they might be able to live from their indie royalties is Amazon set the standard of paying 70% or 35% royalties and most everybody else had to follow. These princely rates put some of the royal back in royalties.

We’re all familiar with what is happening to authors as traditional publishers are squeezed financially. They’re taking money from authors in the form of lower advances, low ebook royalties or maybe under-reported ebook royalties and indirectly through bare-bones marketing budgets.

What may we conclude might happen if Amazon is squeezed financially to the tune of 6-10% of its gross revenues for sales taxes?

Certainly, people who buy from Amazon would pay more, but Amazon doesn’t want to lose sales, so it will look to maintain price leadership by squeezing expenses down everywhere it can.

We would all like to think Amazon loves authors, but cynicism says they would squeeze their authors too – directly by reducing royalties to indie authors and indirectly by asking and obtaining a higher percentage of each book sale from publishers.

So, choose your alternative – high-principled constitutional law arguments or naked self-interest. PG likes both.

Is Sherlock Holmes in the Public Domain?

29 March 2013

From Slate:

Is Sherlock Holmes in the public domain? In the United States, at least, it’s a somewhat tricky question—one that may soon be settled in court. Lawyer and Holmes scholar Leslie S. Klinger has sued the estate, which insisted that he pay a fee to them in order to publish a collection of short stories called In the Company of Sherlock Holmes.  One of the authors wanted to use a character from the 1924 Holmes story “The Adventure of the Illustrious Client.” The copyright to works published before 1923 have expired in the U.S., but since that story appeared after that date, Klinger asked the author in question to speak to the Conan Doyle estate.

The estate insisted that Klinger needed to license the whole book, and threatened to stop Amazon, Barnes & Noble, and other large companies from selling the book if he didn’t comply. Klinger and his coeditor, Laurie King, previously paid a $5,000 licensing fee to publish A Study in Sherlock, but they decided not to give in this time around.  The Conan Doyle estate is known for aggressively pursuing copyright claims, and most people looking to use the character—including the creators of the TV shows Sherlock and Elementary and the producers of the updated Sherlock Holmes movies—have paid licensing fees.

. . . .

Klinger’s lawsuit is a preemptive measure: If he wins he won’t have to pay a licensing fee for his book, and neither will other fans hoping to use Holmes and Watson in their own work. Klinger’s argument is that the famous Sherlock Holmes story elements—including Holmes’ deductive skills, his friendship with Watson, and his frequent disguises—mostlyappear in pre-1923 stories and have thus passed into public domain with the earlier stories.  The estate maintains that the character as a whole remains under copyright until all of the stories are in the public domain. As the Estate’s lawyer, Benjamin Allison, toldThe New York Times last week, “Holmes is a unified literary character that wasn’t completely developed until the author laid down his pen.”

. . . .

“Copyright was intended by its progenitors to be a limited monopoly, not an indefinite monopoly,” Tormey said. “Allowing subsequent character-tweaks to resuscitate otherwise dead copyrights in stories would diminish predictability of result while encouraging chaos and overstatement of rights. Conan Doyle is dead. It’s not like he’s going to be offended by new writers putting Sherlock Holmes in new situations.”

Link to the rest at Slate and thanks to L for the tip.

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