Monthly Archives: February 2016

Conspiracy Theories

28 February 2016

From author Barry Eisler via Youtube:

Thanks to Dan for the tip.

Here’s a link to Barry Eisler’s books. If you like an author’s post, you can show your appreciation by checking out their books.

Put Down the Broom: Tidying Up Can Hamper Creativity

28 February 2016

From Wired:

If clutter drives you nuts, you’re in good company. There’s been a burst of excitement recently about neatness, propelled by The Life Changing Magic of Tidying Up, Marie Kondo’s best-selling guide that urges us to toss out anything that doesn’t “spark joy.” If we can succeed at decluttering, Kondo says, we will feel pure bliss. “The lives of those who tidy thoroughly and completely,” she writes, “in a single shot, are without exception dramatically altered.” As the biggest neatnik and picker-upper in my casually messy family, I thrill to this idea.

But one kink, though. A strand of recent research suggests that mess can, counterintuitively, sometimes be useful.

This is particularly true at work. In one study, Kathleen Vohs, a marketing professor at the University of Minnesota, took 48 subjects individually into two types of rooms—one messy (with loose papers and pens strewn around the desk and floor) and one that was spic-and-span. She had the subjects do a classic test of creativity: Generate new uses for a Ping-Pong ball. When her team scored the results, the subjects who’d worked at a messy desk in a messy room were 28 percent more creative than those in the tidy environment. “When things are tidy, people adhere more to what’s expected of them,” Vohs says. “When things are messier, they break free from norms.”

What’s more, you may perceive colleagues’ messy desks as wrecks—but from their perspective, they’re perfectly organized. In The Myth of the Paperless Office, Abigail Sellen and Richard Harper documented a worker with an epically cluttered lab who could find any document he needed in no time. For pack rats, mess is an organizational strategy.

It also creates serendipity. An old report sitting on the corner of your desk can spark a useful idea when you glance at it. I suspect this is why thinkers and writers often work amid teetering piles of books. A random spine becomes a delicious mnemonic trigger, bringing back a favorite passage or tele­porting me to the first time I read it.

Link to the rest at Wired

The Amazon Marketplace Seller That Says It Has “the Colombian Cocaine of Algorithms”

28 February 2016

From Slate:

To show off the secret behind Pharma­packs, his $70 million retail business, Andrew Vagenas picked up an EOS lip balm and tossed it to his buddy Brad Tramunti. “Watch,” Vagenas said. “He’s like a special kid.” There is nothing about Tramunti that makes you think: lip-balm guy. He’s 33 years old and hefty, with a two-day scruff and a faded T-shirt wrapped around his torso. But he held the lip balm in his paw carefully, inspecting its lollipop-purple-swirl case like a savant.
“This is a new flavor,” he said. “Just came out. Blackberry nectar.” He took it to his desk and brought up its Amazon.com product page. He checked its weight—0.25 ounce. He pursed his lips and calculated the shipping cost in his head: “$1.89,” he muttered. He looked at its Amazon sales rank: 54,000. He brought up a page with suppliers’ prices. “We get this wholesale for $2.23,” he said, smiling. “That, plus shipping, plus our margin? We’ll be in the No. 1 spot.” That meant when a shopper clicked Add to Cart on Amazon, Pharmapacks would get the sale.

Vagenas grinned. Then he tossed Tramunti a box of Vitamin Friends Iron Diet Supplement. “He just gave me a crazy product right now,” Tramunti said. He pointed to his screen: The vitamins already had 201 Amazon reviews. “If we can get this for under 10 bucks, it’s a home run.” “We’re getting it for 11 bucks,” Vagenas said. “OK, it’s a double,” he shot back. “But we’re going to be No. 1 on this product—and it’s ranked 1,451 in all of personal care, No. 2 in vitamins. This is crazy! This is bonkers!” Whatever you want to call it, within hours, Pharmapacks would be the No. 1 seller on Amazon for both of those products—a ranking it would hold for weeks. “He’s my special boy,” beamed Vagenas.

. . . .

This is the Amazon Marketplace, where anybody can sell just about anything right alongside Amazon’s own wares. Unlike eBay, where each vendor maintains a separate listings page, Amazon tidily groups its Marketplace sellers by item, hiding away the inferior offers, to showcase the best deals up front. (In seller parlance, landing the No. 1 spot is called “getting the buy box.”) What looks so clean on your screen obscures the messy and massive jungle of the Marketplace: There are now more than 2 million sellers on Amazon. While the Seattle-based giant still sells the most popular items on the site itself, Marketplace sellers now ship nearly half of the products—about 2 billion items each year, all told—and those sales are growing twice as fast as Amazon’s, according to the consultancy ChannelAdvisor. The Marketplace started in 2000 selling used books. In 2016, it’s a retail phenomenon as significant as any in the past 50 years—together these sellers ring up what ChannelAdvisor estimates to be $132 billion in sales each year. That’s more than Walmart sold in 1997. Yet we know so little about who they are.

On 2015’s Inc. 500 list of America’s fastest-growing private companies, something stood out about the retailers. Nearly all of them, companies that were growing by 1,000 percent or more, had websites that looked a decade out of date. Like, a homepage. Maybe a few links to products. Why? That’s because, these days, such retailers don’t use their own sites much. They build their businesses on platforms—eBay, Walmart.com, Overstock, and especially Amazon.

. . . .

“Our top sellers are things nobody wants to buy at a store. But from there, people buy everything else.”

All the while, more than 100 workers, mostly women, stood at tables in the warehouse packing products into bubble-pack containers that looked like tiny space pods—Colgate toothpaste, Pantene shampoo. A man sat, an air gun in hand, inflating the containers nonstop. As soon as one crackled into shape, he grabbed the next, 15 times a minute. Psst-thwap. Psst-thwap.

Originally, Vagenas and Tramunti and another friend ran a pharmacy in the South Bronx. When they started selling health and beauty products online in 2011, they thought it could make a nifty side business. They rented a little warehouse on a leafy street six blocks from Vagenas’s childhood home in Whitestone, Queens, and started spending half the day there. Mastronardi soon joined them to help run the numbers. As they hammered out kinks, they discovered that selling on a platform like Amazon was totally different from running their drugstore or even a standalone website. It was also a much bigger opportunity.

You could fill a book with all the differences, of course, but the big one was: They could sell whatever they wanted, at whatever price, for whatever period of time. A Marketplace vendor doesn’t worry about stocking a full line of shampoos, or whether certain soaps are always on sale. If they want to sell lotion one week and hairspray the next, they can do that.

Early on, the guys decided that it would be easiest to offer whatever their suppliers had in stock. They built each online listing, and had a developer code a script that scraped the suppliers’ databases to enter each product’s information. When a customer ordered something, they in turn would order it from the supplier, pick it up, and then pack and ship it. That’s still the model, more or less, though nowadays they order in bulk using sales projections and need three trucks and a van to pick everything up. Inventory often stays in their warehouse only for a few hours before going right back out the door. The business is less like traditional merchandising than it is like a commodities trader from a bygone era, buying and selling well-known goods and turning a profit on each transaction.

. . . .

In the platform business, they learned, price is everything. Set a price too high, and Amazon buries it. Setting it too low is worse, earning the buy box and leading to thousands of orders flooding in—and a loss of money on every sale.

Vagenas, a problem solver at heart, loved turning Tramunti’s tricks into rules. He and the team had a developer code the tactics into algorithms, and baked them right into their proprietary software. Now the listings had optimal prices. Sales took off. They called the software the Master Brain.

. . . .

Other marketplace sellers have algorithms. There are now companies that design pricing software for platform vendors: ChannelAdvisor, WisePricer. But that’s all chump stuff when you have a Master Brain. “We can make listings in seconds,” Tramunti boasted. “Everybody else has to do all this hoopala hoppala.”

The conundrum fascinated Tramunti. He’d struggled with dyslexia in school, and like many with it, he’d developed an ability to memorize huge chunks of facts and figures to compensate—as he puts it, “we find workarounds.” He began studying all their products, memorizing competitors’ prices, watching as new items climbed the rankings. He toyed with different pricing strategies, figuring out formulas for how much they could charge for certain products and still get the sale. They started getting the buy box—and making money—more often.

Life as a Marketplace seller isn’t all algorithms and cash. Vendors also need high customer-service ratings to get the buy box. Keeping them that way is a grind, especially when you sell almost 25,000 different products and ship 570,000 orders a month.

Link to the rest at Slate

Author Solutions: behind the headlines

27 February 2016

From The Bookseller:

In January Penguin Random House sold its self-publishing business Author Solutions to US investor Najafi. The sale, PRH said, reaffirmed its “focus on consumer book publishing”, but it also felt like a conscious uncoupling from a relationship that was still awaiting consummation.

Penguin bought AS in July 2012 for $116m (£74m), in an effort to take a stake in the growing self- publishing market. At the time, Penguin’s then-c.e.o. John Makinson said “self-publishing has moved into the mainstream of our industry”. He wanted Penguin to “gain skills in customer acquisition and data analytics that will be vital to our future”.The Bookseller said that it was “the day self-publishing came of age”.

Yet if the acquisition made sense in theory, the reality was somewhat mixed. Circumstance was not on its side from the very beginning. The deal between AS and Penguin came only a few months before Penguin-owner Pearson and Bertelsmann, owner of Random House, went public with their decision to combine the trade publishing units. In retrospect some now interpret the AS deal as a way of adding ballast to Penguin at a time when Random House had its own “self- publishing” business: Fifty Shades.

Meanwhile, AS faced its own internal distractions. In May 2013, c.e.o. Kevin Weiss departed, succeeded by Andrew Phillips, then president of Delhi-based Penguin International. In the same month, both AS and Penguin found themselves the subject of a lawsuit filed in the Southern District of New York by three authors who claimed to have been misled by AS (Penguin was later dismissed from the claim). The lawsuit added to the suggestions that AS operated at the murkier end of the vanity market, encouraging authors to sign up to “packages” costing thousands of dollars for services that failed to deliver. The lawsuit claimed AS was a “printing service that fails to maintain even the most rudimentary standards of book publishing, profiting not for its authors but from them”.

AS contested the suits, but the complaints did not come out of the blue. At the time of the Penguin deal, Kate Pool, deputy secretary-general of the Society of Authors in the UK, called the move by Penguin “absolutely extraordinary” and “worrying”. Others had less polite terms: the writer and blogger David Gaughran, who has written extensively about vanity presses—and in particular Author Solutions—says AS operates a “two-bit internet scam”. The Booksellerstopped taking advertising from AS in 2014.

. . . .

[Author Solutions CEO Andrew] Phillips says that much of what is written about AS online is incorrect: “You shouldn’t believe everything you read, particularly on social media. There are stories that circulate that, when you look at them, are not true.” When asked to give an example, he highlights two online commentators— Japet Villamro and Karen Turner— both of whom claim to have worked for AS and who have left critical comments about the company on author blogs. Phillips says the business has no record of these individuals. He adds “just because someone is posting a comment on social media or claims to be an employee, that is not always the case, and when we can actually make contact with a real author, any concerns they have are usually addressed to their satisfaction”.

Phillips says much of the criticism comes from individual authors or author groups that are opposed to the assisted-publishing route. “We try to remain focused on what we do very well, regardless of that social media noise. Having said that, we have engaged, and if any of those parties wanted to have a reasonable conversation then we would engage again, but it seems that [some of them] don’t want to have a balanced conversation. I do think there is a fairly entrenched position with some parties which is: ‘There is only one route, and you shouldn’t have to pay.’ I don’t believe that. My view is that authors should have a choice.”

. . . .

In addition to its own imprints, AS runs a number of partner imprints with traditional publishers, including: Archway Publishing with Simon & Schuster; Balboa Press, a division of Hay House; LifeRich Publishing, an imprint of Reader’s Digest; and WestBow Press, a division of HarperCollins’ businesses Thomas Nelson and Zondervan.

Internationally, it operates Partridge in India, South Africa and Singapore with Penguin Random House; it runs Megustaescribir with PRH Grupo Editorial in Barcelona, for authors writing in Spanish; in Germany it operates GABAL Global Editions with German publisher GABAL, offering US market exposure for German authors; and in Australia it runs Balboa Press Aus.

Each individual publisher partner is able to tailor the packages. Archway, for example, offers attendance to an author reception at BookExpo America for those packages costing more than $4,999. Phillips does not believe—as for example the SoA does—that the association with a traditional publisher is misleading for authors, rather that it means those publishers can offer authors a positive alternative path to publication.

Link to the rest at The Bookseller and thanks to David for the tip.

Here are some excerpts from the comments to this post:

From David Gaughran:

Here is the actual quote I gave to Philip Jones:

Author Solutions has had plenty of opportunities over the years to respond to its critics or address the ever-present issues with its service, but it has always refused to acknowledge any problems. Andrew Phillips himself was given the chance, at his own request, to engage with the Alliance of Independent Authors back in 2014. Instead, he repeated blandishments from press releases and, indeed, has taken no action since then on all the issues raised: http://selfpublishingadvice.or…

I don’t believe that Author Solutions or Andrew Phillips have any genuine interest in reform but I’d be delighted if they proved me wrong by immediately taking steps to remedy some of the worst behaviour – such as the relentless high-pressure flogging of over-priced and ineffective marketing packages, or the dishonest methods it uses to ensnare writers. An example: Author Solutions runs a number of faux-comparison sites like FindYourPublisher.co.uk – which purport to give authors independent advice but merely act as funnels to Author Solutions.

There are problems with all aspects of Author Solutions operations but practices surrounded marketing packages are the most egregious. The products are of questionable efficacy to begin with and are then sold at insane mark-ups. Author Solutions charges $859 for a “Hollywood Review” of a book’s potential for film/screen adaptation, and then farms it out to Craigslist freelancers for just $110. The same crazy mark-ups can be seen in the selling of “web optimized” press releases which cost $1,299, book signings for $3,999, or podcast interviews for $10,669. These practices are simply indefensible and could be stopped tomorrow.

From Orna Ross:

I’m afraid ASI’s hard-sales environment and poor customer service is in no way reflected in this article, in which Andrew is given so much room to talk about his company’s plans and, once again, fails to engage with the author community’s widespread concern.

As well as David Gaugran’s tireless investigation of this issue, many other author advocates — notably Jim Giammatteo, Victoria Strauss, Mick Rooney, John Doppler Schiff, Ben Galley, Emily Seuss, Helen Sedwick as well as I, and the Alliance of Independent Authors’s Watchdog Desk — have all spoken out against practices at ASI.

None of these busy authors is motivated by anything other than a wish to see other authors served well by publishing services, not harassed by sales calls and sold a dream dressed up in expensive packages (see below). We continue to get severe complaints about ASI all the time. I — and others — have told Andrew this. He has displayed no interest in changing practices or addressing author community concern.

ALLi is not opposed to author services — on the contrary, we have a partner membership for good services — but we do warn authors away from services that over-promise, over-charge and under-deliver.

Below are some extracts from a long sales email from one of ASI’s UK imprints, reproduced with permission of the 85-year-old author who contacted our Watchdog Desk, upset and confused having been bombarded with calls urging her to take a “Hollywood package”. The email exchange reveals, clearer than anything I can say, the values at play in this company.

I hope that Andrew will make himself available in this comment box for discussion of the issues. They are serious and they need to be addressed.

With thanks
Orna
Director, Alliance of Independent Authors

AUTHOR: “At the beginning of this year Author House were trying to persuade me to pay for a screenwrite for xxxxx, a book they had published. I thought it was a scam and said so despite the amazing number of times a consultant tried to persuade me. Now his boss has found and liked xxxx (another of the author’s books) so I was treated to another hour of hard sell. I said..I needed something in writing… so they sent the enclosed e-mail… I am a pensioner and not wealthy, I cannot throw money away on a pipe dream… Is this film suggestion a scam? Should I be tempted? Your knowledge of the publishing industry is invaluable. Could I ask your advice please?”

Extracts from the letter to the Author from Author House (spelling & grammar preserved):

ASI: Good Day!

I trust that this e-mail finds you well. First of all, I would like to thank you for taking the call earlier and it was my pleasure to speak about your book. …I hope you agree with me on this that the book’s potential is not just limited to publishing retail industry but even more to Hollywood movie industry…

I know that this book needs this big push so that we could help you with your book’s success. That is the reason why we are doing this. We have carefully analyzed each marketing avenue and we are confident that this would surely provide your book the best possible way to be noticed not just by ordinary person, not just by highly interested individuals but even for those who are decision makers and major executives in the movie industry.

I am suggesting that we do these to create huge and essential noise for your book. Let us win the attention of the major movie companies… As promised, I am sending you detailed plan of the extensive marketing we are willing to provide you and your book.

-COMPLETE MARKETING SET-UP FOR YOUR BOOK TARGETING HOLLYWOOD DECISION MAKERS

-TRANSFORMATION OF THE BOOK TO A COMPLETE MOVIE/MARKET READY PROJECT

-PROFESSIONAL REPRESENTATION TO A+ HOLLYWOOD COMPANIES

-PROFESSIONAL RECOMMENDATION TO HOLLYWOOD EXECUTIVES AND DECISION MAKERS

With Hollywood Director’s Cut package you can seize the initiative with a compelling bundle of services designed to turn heads and get a few crucial nods from film and TV executives in the highly competitive entertainment industry…

I highly recommend that we give your book this rare opportunity be represented well in the industry. I have seen a lot of good titles failed to thrive in this industry not because it was not good enough but simply because the authors fail to see the potential of the book and this is the one thing that I want to prevent. You, of all people, know the value of your book. And your book deserves this huge marketing exposure. The Books-to Screen Hollywood program is by far the most unique and powerful marketing tool the company has introduced to it’s authors. I suggest you take this campaign.


Timing? Never been better, it is the best time to make them see the true essence of your work. Also, movie companies now is in very much in dire need of new concepts, that is the main reason why they are now turning their focus on self publishing authors.

I know how important this project of yours is to you and I would like to tap in these important people to have the book be taken seriously. Not to mention that it will be our company doing the job of an agent for you and the leg work as well, without asking any cut from it. Thus, you will enjoy full control and registration under your name and 100% revenue going your way.

All for the best,

RONALD REESE

Senior Marketing Consultant

AuthorHouseUK

Progress is impossible

27 February 2016

Progress is impossible without change, and those who cannot change their minds cannot change anything.

George Bernard Shaw

Mike Shatzkin, e-publishing guru

27 February 2016

An interview with Mike Shatzkin from TeleRead:

T: Where do you land on the topic of physical Amazon bookstores? Do you really think they’re gunning for 400 brick-and-mortar locations? What are the possible anti-trust ramification of that? And other things. You’ve heard a rumor that B&N may kill the Nook in the UK–could it next fade away in the U.S. And what would that mean, in possible antitrust terms?

MS: I am not an expert in anti-trust, but we’re featuring one named Jonathan Kanter at DBW so we’ll get answers to those questions. I think a rollout of Amazon stores—who knows what number—makes a lot of strategic and logistical sense for Amazon. B&N’s new Chief Digital Officer is speaking at DBW too. I expect he will talk about the future of the Nook. It must always have been hard for them to operate Nook outside the US. Their big competitive advantage was controlling their own stores. And they don’t control any outside the US.

T: One of the big topics at DBW is “transformation.” What are some of the companies that seem to evolving well with the changing marketplace, and what attributes do they share? Have the big publishing companies done enough to transform in this marketplace or is there greater room for them to change? In what areas?

MS: Ingram is the outstanding example of a company that has transformed. They are earning half their margin or more from businesses they didn’t have two decades ago. The other companies we’re featuring are large and small, new and old. They are Rodale, Sourcebooks, Quarto, John Wiley, Houghton Mifflin Harcourt, NetGalley, and Diversion Books. We define transformation as a dramatic change in business model or revenue sources. The Big Five have not really transformed. They are continuing with basically the same business model. Sourcebooks, for example, has built an entire new business of customized children’s books. I can’t think of any initiative from a Big Five house that is comparable transformative.

I still believe the big transformations to come are around “verticals”, topics of interest. There has been real movement on that front from big houses as marketing initiatives. But they haven’t built the verticals into new business models or free-standing profit centers. I think that might be something to look for in the next few years.

T: How keen are you at this point on publishers selling directly to consumers? Who’s doing it best, and what are they successful at it?

MS: I think it is ultimately a necessary capability, but not a transformative one. Publishers will never succeed selling most of their books directly. But the tools to do this are becoming so easy and ubiquitous that it is hard to see how all of them can continue to avoid it. Right now the big publishers are doing a lot to have direct contact with consumers without necessarily owning the transaction. I think all of the Big Five are doing something: vertical communities, email blasts promoting discounted ebooks, and increasingly coaching authors to be helpful marketing partners. But there’s a lot of room for “more” on all these fronts from all the big houses.

. . . .

T: How do you feel about the future of public libraries? Will there be a place for them 20 year from now, and if so, what will it be?

MS: I really have a hard time understanding how public libraries make commercial sense in a mostly ebook world. If you can go to one website and get the ebook for free and at another you have to pay for it or for access to it, why wouldn’t you always choose “free”? Free public print libraries always had “friction”: you had to go get the book and you had to go take it back. AND ownership had a benefit: a physical object you could lend, write in, or use to decorate your shelves. All of this goes away with ebooks. You can see publishers struggling with this now with high library prices and loan cap rules, for example. As the infrastructure gets built out, I see the conflict becoming more and more difficult to manage.

Link to the rest at TeleRead

Why do we love Jane Eyre?

27 February 2016

From the BBC and thanks to Brendan for the tip.

 

Trump Attacks Jeff Bezos

27 February 2016

From The Weekly Standard:

At a rally in Fort Worth, Texas today, Donald Trump unloaded on Amazon.com founder and owner of the Washington Post Jeff Bezos.

“I have respect for Jeff Bezos, but he bought the Washington Post to have political influence. And I gotta tell you, we have a different country than we used to have. We have a different… He owns Amazon. He wants political influence so that Amazon will benefit from it. That’s not right. And believe me, if I become president, oh do they have problems. They’re gonna have such problems,” said Trump.

Trump went on to promise that, if he becomes president, he will “open up our libel laws, so when they write purposely negative and horrible and false articles, we can sue them and win lots of money.”

Link to the rest at The Weekly Standard and thanks to Nirmala and others for the tip.

PG requests that visitors avoid getting into a political fight in the comments.

Samhain Closing

26 February 2016

From Erotic Romance Publishers:

Email to authors posted, for now, without any comment from me. Names and emails redacted and email shortened.

Dear Friends,
It’s with the heaviest of hearts and a great sadness I bring you the news of Samhain beginning the process of winding down due to our market share’s continuing decline. We’re approaching the point where we cannot sustain our business.

We prefer to go out gracefully and not get to the point where our overhead compromises our ability to pay the authors’ royalties. That’s would just be wrong. We want to stay on the high road and keep your respect. This company was started with the purpose of providing a safe and friendly house for authors to publish and begin or expand their career. If we have to end, then we shall do so in the same manner.

This has not been a decision made lightly. The recent sales numbers are not providing any hope for recovery and none of our efforts have been successful. For the last two years we have tried many and varied types of campaigns to promote your titles and have had no success in reaching the new customers we need to thrive. Each month that goes by our sales continue to shrink and it would be disingenuous to keep contracting new titles.

We’ve tried to renegotiate terms with Amazon in order to buy better placement within their site and perhaps regain some of the lost traction from the early days but have been met with silence. Other retail sites are trying, but the sales have never risen to the level of Amazon and are declining as well.

As it took time to grow to the size we became, it will take some time to shrink down and end our run properly. This means that we are NOT turning off all of the books and just closing down. It doesn’t work that way. We are going to continue on with selling our titles and launching the titles that are ready to go, but we are laying off about half the staff, and releasing all freelance people.

Many of you are going to ask for your rights back, I expect. Please be patient and understand it will take time to process those titles where rights are available to be returned. If your title/s haven’t yet reached the point to have your rights returned, we won’t be making any mass releases at this point. We need the income to continue while we wind down and ask that you understand that we will release the books when we can and we won’t be abusing your trust. I won’t drag this out any longer than I have to, but it isn’t going to be something that will be wrapped up in the next six months. Samhain has commitments to vendors other than writers and to turn it all off now would put me in bankruptcy. I hope you don’t want that any more than I.

. . . .

Saying goodbye is always hard. I will miss working with all of you. Samhain has been my greatest adventure and I’m bereft at having to give it up. Please accept my thanks for all the trust you’ve invested in Samhain and I hope you understand that this choice to begin the wind-down to close is made to honor that trust.

Link to the rest at Erotic Romance Publishers and thanks to Angie for the tip.

If Amazon pricing of ebooks is the problem, is agency actually the right solution?

26 February 2016

From veteran publishing consultant Mike Shatzkin:

In the past week, I’ve had conversations with leading executives at two of Amazon’s competitors in the ebook space. They had strikingly different takes on whether the agency pricing regime, which is now in place by contract with all five of the biggest trade publishers, helps keep competitive balance in the ebook marketplace or prevents it.

Agency pricing was promulgated by Apple for the opening of the iBookstore in 2010. What it meant was that publishers would set a price that was “enforced” across the retail network. Apple liked this because it meant both that they didn’t have to price-compete with Amazon and because they didn’t have to think about pricing hundreds of thousands of items on a daily basis. (And it fit the model Apple used to sell other media.) Publishers liked it because they feared the erosion of print sales that cheap ebooks might lead to and because it seemed that level prices might reduce what was then Amazon’s stranglehold on the ebook market.

. . . .

Now the big publishers have replaced the original agency agreements with new ones that appear satisfactory to the court because they were obviously separately negotiated. And the new ones seem to allow at least some of them more flexibility to set and enforce higher prices than the numbers in the original Apple-promulgated deals. And all of that has led to a reconfigured marketplace.

The good news for the publishers is that print sales erosion — at least for the moment — seems to have been stopped. (Print sales started to grow even before “new Agency”; when higher prices hit the ebook market, print was immediately assisted.) A variety of industry and company sales statistics seem persuasive on that point. The percentage of revenues coming from ebooks for big publishers has declined and the sales of print have risen. And there is even some anecdotal evidence suggesting that bookstore retail shelf space is increasing again. Even if that is true, it is an open question whether it is sustainable, or whether it is a delayed and temporary marketplace response to the shuttering of 400 giant Borders stores, which occurred in 2011. Bookstores might also be helped by the diminishing book shelf space at mass merchants, a venue where print continues to lose ground.

But there is also some good news for Amazon in how all this has worked out. Their market share on the ebook side is rising. Their margins on the ebook side must have gone up even more, since they’re being “forced” to keep the margin they earn on Big Five ebook sales. (Wouldn’t it be ironic if Amazon’s internal calculations are that they can afford more losses on their Kindle Unlimited subscription program because of the margin they’re earning on the Big Five single-title sales? We can only guess…) And certainly Amazon benefits from the increased sales of print.

In fact, they could be partly responsible for it. All the searches on Amazon for Big Five books show an agency-priced ebook with a highly-discounted print book, often cheaper than the ebook, alongside of it. How much of the print book sales increase is due to the reaction of consumers being presented with that choice?

. . . .

Only Barnes & Noble can even attempt to meaningfully compete with Amazon in this environment. The price-sensitive book consumer needs to see both the ebook and the print book to make a wise purchasing decision. They won’t see that at Kobo, Google, or Apple’s iBookstore.

So competing with Amazon on price is confined to B&N on print and confined to non-agency titles — which means only a sliver of the bestseller list — for everybody else. So, is everybody happy? Publishers are selling more print, which they wanted. There’s growth in the indie store base, which publishers also wanted. But Amazon continues to grow market share in relation to Barnes & Noble and now threatens to open bookstores to compete with B&N and the indies. And that is most definitely not what publishers wanted.

. . . .

What this executive believes is that price-cutting as a way to recruit customers is a fool’s errand. The customers who come aboard for a cheap deal will abandon you just as fast for somebody else’s cheap deal. They don’t stick. On the other hand, offering pricing advantages based on customer loyalty is a better bet. This player thinks that having agency in the market makes it easier to hold onto customers once a platform has acquired them. As evidence, that person pointed to the loss of market share by Nook that occurred once the DoJ restored discounting under agency.

Link to the rest at The Shatzkin Files

Mike has some very good observations in this column.

On the other hand, PG wonders if anyone in Big Publishing understands a single thing about disruptive technological innovations and their impact on legacy products and legacy producers.

Trying to manipulate pricing and customers to preserve printed book sales is a fool’s errand. The future of books is digital just like the future of letters became digital when email was introduced and the future of news became digital when the web and streaming video entered the scene.

Stories are special. Printed books are not. Big Publishing is trying to preserve its landline business in a cellular world. The future of paper is in napkins and toilet tissue, not as a medium for communicating ideas.

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