Big Publishing

How Amazon Brought Publishing to Its Knees — and Why Authors Might Be Next

31 July 2014

From Mashable:

Morgan Entrekin is happy with the relationships he’s developed with Amazon. As the president of independent publisher Grove/Atlantic Books, he witnessed the industry change as Amazon’s introduction of the Kindle helped publishers like him embrace the digital revolution that has battered other industries.

It’s the future that he’s worried about.

“Right now [Amazon] is allowing me a perfectly fair margin, but what happens when they have total control or twice as much of the market share than they have now?” he said.

Entrekin’s sentiment isn’t unusual. Amazon’s skirmishes with various publishers had been obscure to most until May, when the ecommerce giant began to block preorders of upcoming Hachette books. Since then, the dispute has been a public one, especially by Amazon’s usually tight-lipped nature.

The relationship between Amazon and publishers started out as mutually beneficial. Amazon brought publishers into the digital age, and publishers were happy to provide the content in return for a new revenue stream.

As e-books grew and brick-and-mortar businesses like Borders struggled, the business dynamics between Amazon and publishers changed. Publishers like Hachette — after being boosted by Amazon’s investment and innovation — are now uncomfortably reliant on the ecommerce site and looking for ways to maintain a grip on an evolving industry but finding none.

. . . .

“We have to give a tremendous amount of credit to Amazon and Jeff Bezos and his team for the investment that they were willing to make in those years,” Entrekin said. “They did it in an orderly manner, in a way you could trust, and it’s helped us.”

There was a time when e-books were just a small part of the overall market, but now e-books are reaching parity with print. In 2013, some 457 million e-books were sold vs. 557 million hardcovers, according to the Association of American Publishers and the Book Industry Study Group. (Paperbacks were not included in that estimate.)

The sales growth magnifies publishers’ unease with the with the $9.99 price point that CEO Jeff Bezos had decided on — a number that had no basis in economics but rather in psychological pricing, according to Brad Stone’s defining book on Amazon, The Everything Store. Amazon recently defended that price in a blog post, claiming it is better for consumers, publishers and authors.

The $9.99 e-book introduction came after publishers had already seen the prices of books fall as chain stores like Barnes & Noble and Borders drove out independent sellers through lower pricing.

. . . .

By outsourcing the innovation to Amazon, publishers were subject to its preferences — including that $9.99 price point.

“[Amazon] put downward pressure on prices because Amazon was always trying to lower e-book prices. Publishers were always trying to prevent that from happening because it lowered the perceived value of books,” said Arun Sundararajan, a professor at New York University who specializes in digital economics.

. . . .

Whether publishers can figure out how to manage a $9.99 price point and Amazon’s market dominance may end up being a footnote in history if self-publishing continues to grow.

Authors, attracted by the prospect of keeping 70% of sales as long as they price their books at or below $9.99, have begun to sign up with Amazon, skipping publishers altogether.

. . . .

Advocates of self-publishing, like author Hugh Howey, argue that the royalty opportunities are too great to pass up, and that publishers will need to transition into a different role to remain relevant.

“I think today’s successful self-publishing groups will become tomorrow’s boutique publishing agents. The advantage of worldwide distribution through e-books and on demand is already outweighing the advantage of being in a bookstore for three to six months,” Howey said. “And the financial difference between royalties is so massive that more and more authors are discovering this, which allows for colleagues to discover it. I really think in 10 years, you’re going to see a lot more people self-publishing.”

Link to the rest at Mashable 

Amazon’s Latest Volley

30 July 2014

From John Scalzi:

Another day, another volley in the Amazon-Hachette battle, this time from Amazon, in which it explains what it wants (all ebooks to be $9.99 or less, for starters) and lays out some math that it alleges shows that everyone wins when Amazon gets its way.

. . . .

I think Amazon’s math checks out quite well, as long as you have the ground assumption that Amazon is the only distributor of books that publishers or authors (or consumers, for that matter) should ever have to consider. If you entertain the notion that Amazon is just 30% of the market and that publishers have other retailers to consider — and that authors have other income streams than Amazon — then the math falls apart. Amazon’s assumptions don’t include, for example, that publishers and authors might have a legitimate reason for not wanting the gulf between eBook and physical hardcover pricing to be so large that brick and mortar retailers suffer, narrowing the number of venues into which books can sell. Killing off Amazon’s competitors is good for Amazon; there’s rather less of an argument that it’s good for anyone else.

. . . .

Amazon’s math of “you will sell 1.74 times as many books at $9.99 than at $14.99″ is also suspect, because it appears to come with the ground assumption that books are interchangable units of entertainment, each equally as salable as the next, and that pricing is the only thing consumers react to. They’re not, and it’s not. Someone who wants the latest John Ringo novel on the day of release will not likely find the latest Jodi Picoult book a satisfactory replacement, or vice versa; likewise, someone who wants a eBook now may be perfectly happy to pay $14.99 to get it now, in which case the publisher and author should be able to charge what the market will bear, and adjust the prices down (or up! But most likely down) as demand moves about.

Link to the rest at Whatever and thanks to Ben for the tip.

PG will quote himself in a comment he posted last night:

Does Barnes & Noble have a say in the prices it charges for books?

Amazon’s a retailer. Retailers set prices.

If Hachette wants to set prices, it should open its own store.

But, of course, Hachette experimented with price-fixing. Now it’s hooked. Let that be a lesson to all of you young people – just say no to price-fixing.

Amazon Calls for Hachette to Cut E-Book Prices

30 July 2014

From The Wall Street Journal:

Amazon.com Inc. on Tuesday described its dispute with the Hachette Book Group as a battle for lower consumer prices on digital titles and a bigger payday for writers.

In a posting on its website, Amazon said that it would be willing to accept 30% of digital book revenue, the same percentage it currently receives from Hachette, if the publisher agreed to lower digital prices on many of its titles to $9.99 from between $12.99 and $14.99.

. . . .

In the blog post, Amazon said that its internal data showed that when a book is priced at $9.99, it sells nearly twice as many copies as when it is priced at $14.99. It argued that, as a result, total revenue at $9.99 is more than when the book is priced higher. “At $9.99, the total pie is bigger,” stated Amazon.

A spokeswoman for Hachette didn’t respond to requests for comment.

. . . .

In its Tuesday posting, Amazon suggested authors should receive 35% of the e-book retail price. Many authors today receive 25% of net revenue on e-book sales, a point of contention for some who consider it too small.

. . . .

The Authors Guild, at least, didn’t appear to be mollified. It criticized Amazon’s suggestion for lower retail prices. “Lower e-book prices aren’t necessarily the best thing for writers,” said Roxana Robinson, president of the Authors Guild. “We get a percentage of the price as a royalty. You also have to take into consideration the price of the hardcover. Yes, it’s cheap to make a digital book but it’s expensive to present a book in hardcover.”

Link to the rest at The Wall Street Journal (Link may expire)

The Author’s Guild continues its never-ending quest to provide the most bewildered and unhelpful comments on the subject of Hachette/Amazon. PG wonders if they’re consciously trying to retire the Clueless Trophy.

Publishers need to rethink their marketing deployments and tactics in the digital age to take advantage of their backlists

29 July 2014

From veteran publishing consultant Mike Shatzkin:

Well-articulated complaints about the way traditional publishing compares to self-publishing have recently been posted by two accomplished authors, one who writes fiction and one who writes non-fiction.

These point to what most publishers really should already know. Some fundamental and time-honored truths about publishing need to be reexaminedas we continue the digital transition. And one of the things that really needs to change is the distinction between backlist and frontlist.

There is a real baked-in logic to how publishers see their responsibilities and effort allocation across their list. Books have always been launched like rockets. The publisher commits maximum firepower to getting them off the ground. Most crash to earth. Some go into orbit. The ones that go into orbit have “backlisted” and, like satellites, it takes no power or effort to keep them in orbit for a long time if the initial blast-off gets them there.
In fact, a virtuous characteristic publishers have always recognized about backlist stands in the way of developing the right 21st century approach: backlist books sell without the marketing effort that it takes to introduce a new book.

. . . .

My Logical Marketing partner, Pete McCarthy, who worked for both Penguin and Random House in his corporate career, points out that titles in the backlist make can make up more than half the profits for a Big Five house in a given year.

. . . .

Experienced publishers learned over the years that it didn’t matter what promotion you did for a book not fully distributed. If it wasn’t available in stores, promotion and advertising wouldn’t make it sell. Savvy publishers would ignore news breaks or marketing opportunities for books that had gone through their peak bookstore distribution cycle — which can be as short as a few months or even less if a book doesn’t gain initial traction — because chasing them was wasted effort.

None of this is true anymore. Any break can get around quickly, or even “go viral”. And there don’t need to be books in any stores for a break to move print and digital copies. For many categories of books, most copies are already bought online. It’s probably the case for the majority of titles published and it is true for periods of time for just about any title, particularly an older one past its bookstore peak that has a sudden moment of relevance or fame.

. . . .

The common experience of the two authors who have switched from traditionally published to self-published and written about it is that some marketing effort, including price-fiddling, applied to long-ago backlist can resuscitate a dormant book and that fact, combined with the higher share of revenues self-publishing brings, can make the effort of managing their own publishing business well worth the effort to them. Another component is that both authors want to work on making their books sell.

Of course, this constitutes a loss to the publishers whose initial efforts helped create both the product and the platform that the self-publisher and the self-publishing infrastructure (most prominently Amazon, but there are plenty of players there) then capitalizes on.

. . . .

There is a critical strategic question here that the industry has not resolved. Authors really need to control and manage their own personal web presences and decide on how to best leverage those presences — in conjunction with their publisher(s) or not. But managing a personal web presence is knowledge-, cost-, and labor-intensive and there is no great correlation between how well a person can write and how well they can manage their online opportunities. Still, an author can’t really totally entrust that work to any one publisher, because each is only really interested in the books they publish.

. . . .

[T]he fact is that it is easier to do intelligent and targeted marketing for a book that is a year old than for one that hasn’t been published yet.

But publishing organizations are not structured to take advantage of that fact. In the past ten years, the ratio of marketing personnel to sales personnel has changed in every house: more marketers and fewer sales people. But there has not been a comparable shift in marketing deployment between new titles and backlist. If publishers want to stop losing their most marketing-savvy multi-book authors to self-publishing, that’s something that urgently needs to change.

. . . .

Publishers need to recognize that if authors can sell their backlist more effectively than their publisher(s) did, the publisher was doing something wrong — or failing to do some things right. Authors are right to leave and take matters into their own hands when that happens. Publishers further need to recognize that the authors who can effectively market themselves are the very authors they most want, and that figuring out how to create an environment of collaborative synergy with them is what the successful publisher of ten years from now will have done. 

Link to the rest at The Shatzkin Files and thanks to Terrence for the tip.

It’s painful to see an industry that has the well-being of so many talented authors under its control demonstrate that it is clueless about marketing books outside of traditional bookstores.

As PG has said before, he regards Mike’s thinking as representative of some of the ideas floating around the best minds in New York publishing. Unfortunately, calling the ideas discussed in this article Online Marketing 101 would be defamatory to Marketing 101.

Again, the thought that authors’ financial welfare is in the hands of such tradpub marketing morons is depressing.

Publishing industry reels after nine million fewer books are given as gifts in 2013

29 July 2014

From The Independent:

The number of books being given as gifts has fallen by nine million in a year, delivering a new financial blow to the publishing industry as UK consumers turn away from hard copies in favour of digital reads.

The trend was revealed in Nielsen Book’s UK Books & Consumers Annual Review for 2013, which identified a four per cent year-on-year decrease in the UK book market between 2012 and 2013 both in terms of volume and value.

. . . .

“In view of the importance of the gift market to the book industry,” she said, more work was needed to examine the causes of “the apparent decrease in the value that consumers are placing on books as gifts”. Similar patterns have been identified in the United States. Gifts accounted for 22 per cent of book sales in 2013, down from 24 per cent in 2012.

The survey found that digital e-books now account for 25 per cent of all book purchases (up from 20 per cent in 2012) and that their growth is at the expense of paperbacks (down to 50 per cent from 55 per cent) but not of hardbacks (steady at 21 per cent).

. . . .

Accounting group PwC recently predicted that the e-book would overhaul the paperback and hardback as the preferred reading format by 2018.

Link to the rest at The Independent and thanks to Robert for the tip.

July 2014 – Barnes & Noble

28 July 2014

From Author Earnings:

In February, we took a snapshot of 5,000 genre e-books on the Nook store to compare with our Amazon reports. It’s been nearly half a year, so we thought it was time to go back for another look.

The first chart is a simple count of the number of titles on the major genre bestseller lists, broken out by publisher. For each of the four sets of charts, the current snapshot is followed by what we saw back in February:

a1

Not much change in the count of titles on the lists. But look at estimated daily unit sales by publisher:

a2

This effectively captures the average ranking of the ebooks on these bestseller lists. Note the increase for indies and the decrease for nearly every other publisher.

Knowing the sale price, we can estimate daily gross earnings by publisher:

a3

Again, note the changes. Finally, knowing industry royalty rates, we get daily author earnings by publisher:

a4

One thing of note with the last three sets of charts is that Hachette titles have suffered on the Nook store over the past five months. It’s possible the ongoing negotiations between Amazon and Hachette are impacting their sales on other digital retail outlets. More striking, though, is the market share gained by indie authors. If you scrolled through Nook’s genre bestseller lists, and tallied each book and how it was published, you would find that over half are now self-published.

While Nook’s e-book market share is much smaller than Amazon’s overall, it is just as indie-friendly as the Kindle store. And the daily royalty share going to indies is nearly twice as large as the share going to Penguin Random House authors. In fact, indies seem to be on their way to overtaking the Big 5 combined, just as they have on Amazon.

Link to the rest at Author Earnings

PG finds the speculation of Hugh and Data Guy that the decline in sales of Hachette’s titles in the Nook Store is a result of the decline of those titles on Amazon interesting.

Because of the Nook Store’s terrible design, some owners of Nook ereaders have discovered that it’s easier to locate new books on Amazon, then go buy those books at the Nook Store.

If correct, this speculation speaks to the scope of Amazon’s power. If Amazon can make sales go up or down on the Nook Store, what use is it for publishers to pay money for prime exposure on the Nook website? That would be yet one more reason for talented employees still working at Nook to actively seek other employment.

However, PG suggests an alternate possibility:  Hachette is spending so much time, money and energy promoting its anti-Amazon message that it has failed to spend time, money and energy promoting . . . books.

This would be a typical screw-up for a poorly-managed company – taking its eye off the ball during a crisis and sliding down the tubes financially.

Hachette marketing and PR people are expending so much effort feeding talking points to Colbert and drafting letters for Preston, Patterson et al that, by the time Happy Hour rolls around, nobody has the time or energy to schmooze with The New York Times book review editors or tweet about a new release.

If you’re a tradpub author considering whether to send a book to Hachette or another publisher, might you not wonder how much time and effort Hachette will devote to your book when its principal business seems to be bashing Amazon and sales of Hachette titles are tanking all over the place?

Or if you’re an author who only has Hachette as a tradpub option, might you not feel that now is a good time to see what this self-publishing stuff is all about?

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Book Publishing Needs Socialism to Save It

27 July 2014

From Book Marketing Buzz Blog:

Let me just state up front that I love America and wouldn’t live anywhere else but, I also believe there’s room for a blend of socialism and capitalism to exist in a democratic society, and when it comes to how books are sold or treated, I prefer what the French and other advanced nations do.

They protect books and the printed word. I applaud them—and so should you.

Here in the U.S., thanks largely to Amazon, books have become commoditized. You can buy clothes based on price—or a desk or the hotel you vacation at. But books should not be purchased based on price alone.

. . . .

[T]he Hatchette-Amazon battle is now being waged and the repercussions of it could dictate the fate of publishing’s long-term viability. However, in other countries, books are a much healthier product.

In France, where Amazon only owns 10-12% of the book market—but 70% of online sales, Amazon is contained because of laws passed to protect and support bookstores and publishers.

The law says online sellers can’t offer free shipping on discounted books. Further, booksellers can’t offer more than a 5% discount off a book’s cover price.

I wish it were that way here.

In Germany, books can’t be discounted. In fact, six of the 10 biggest book-selling countries have versions of fixed book prices—Japan, Italy, Spain, South Korea, Germany, and France.

Link to the rest at Book Marketing Buzz Blog and thanks to Karen for the tip.

Just a reminder that PG doesn’t necessarily agree with everything he posts here. He tries to include a variety of opinions.

My Independence Day: An Open Letter to Jeff Bezos of Amazon

27 July 2014

From author Michael Stephen Fuchs:

Dear Mr. Bezos,

I have been an enthusiastic Amazon customer since early 1996, and thus consider myself to be one of your first. A couple of years later, you guys sent me a nice mousepad with one of my orders. I added up what I had spent with Amazon to that date, and it was already thousands of dollars, so I wrote back and suggested that, for that kind of customer spend and loyalty, I deserved at least an Amazon t-shirt. You sent me a t-shirt. I’ve been in love with Amazon ever since.

. . . .

And that was prior to Kindle Direct Publishing (KDP).

As it happens, I have been a fiction writer since 1994. Eventually – after literally thousands of rejections – I got picked up by Macmillan, who published my first two books in 2006 and 2007. The second sold less well than the first – so they unceremoniously dropped me. (*) That was it. Dream over.

And then along came KDP. And in December of 2012, I had the first month of my life when earnings from my writing actually paid my bills – thanks utterly and entirely to KDP. My earnings have gone up from there, and I have been writing full-time ever since. And I have now achieved my dream of being a jobbing novelist.

ALL THANKS TO YOU AND KDP.

And I have, not at all incidentally, been freed from the cartel practices, unconscionable contract terms, and not to mention soul-crushing rejection and frustration, of the Big Six publishers in London and New York, and the literary agency system. Now I write books for my readers, who buy them. Now I am free.

ALL THANKS TO YOU AND KDP.

Thank you very, very, very much indeed. And please don’t ever change it (KDP). And sod Hachette.

Link to the rest at Dispatch from the Razor’s Edge

Here’s a link to Michael’s books

Writers unite in campaign against ‘thuggish’ Amazon

26 July 2014

From The Guardian:

Nearly 900 authors across world back criticism of online retailer’s business tactics in ebooks dispute with US publisher Hachette.

They include some of the biggest literary names on the planet, among them Stephen King, Donna Tartt, Paul Auster, James Patterson and John Grisham; a Pulitzer prize winner in Jennifer Egan; and four from this year’s Man Booker longlist, Joshua Ferris, Karen Joy Fowler, Siri Hustvedt and Joseph O’Neill. Then there are first-time writers, historians, biographers – all of them part of an unprecedented campaign against the world’s biggest books retailer, Amazon.

. . . .

As the standoff continues, Amazon has been slowing down delivery of Hachette books, preventing pre-order and removing previous discounts.

It is “thuggish behaviour”, said the Maine-based thriller writer Douglas Preston. “I’m talking to so many young authors, struggling debut authors who have worked for years and years to get published and then Amazon does this and crushes their hopes and dreams of building an audience.”

Earlier this week Preston had nearly 900 names – also including Jeffery Deaver , Lee Child, Barbara Kingsolver, Clive Cussler, Anita Shreve and Philip Pullman – backing a letter that he intends to publish, full page, in the New York Times.

“I have never seen in my entire life authors coming together like this,” he said. “Ever. For any reason.

“Amazon has been throwing its weight around for quite some time in a bullying fashion and I think authors are fed up. We feel betrayed because we helped Amazon become one of the largest corporations in the world. We supported it from the beginning, we contributed free blogs, reviews and all kinds of stuff that Amazon asked us to do for nothing.

“We thought we had a fairly good partnership but i n the last half dozen years Amazon’s corporate behaviour has not supported authors at all.”

. . . .

“We’re not against Amazon as a company – we would like to see it sell books, be profitable and successful. What we object to is harming authors who have nothing to do with this dispute to gain leverage.”

. . . .

Philip Jones, editor of the Bookseller, said: “Everybody I speak to thinks this negotiation is pivotal to what happens next. We won’t know what the terms are when they eventually settle at but I think there will be a line drawn in the sand – a line we all have to live with.”

It is not the first time this sort of dispute has happened.

“The difference here is that Amazon is so big, so dominant that it has a much wider and chilling effect,” said Jones. “Particularly on the ebook market where if you are not being sold or actively promoted on Amazon you really are dead in the water.”

He too had never known writers so angry. “That’s the thing that’s different this time – we’ve seen writers take sides which is remarkable and deeply worrying for Amazon. Becoming widely known as book author-unfriendly is not a great place for Amazon to be.”

. . . .

Amazon has also had support from self-publishing authors. Hugh Howey, something of a poster boy for self-publishing, was one of those behind a petition on Change.org supporting Amazon for creating a level playing field and characterising Hachette as the bad guys. Under the title ‘Stop fighting low prices and fair wages’ it had, on Thursday, 7,367 signatures.

Amazon, launched by Jeff Bezos 20 years ago, is a difficult company not to use. It is also an easy company to dislike – the Guardian revealed in 2012 Amazon had paid almost no UK corporation tax despite recording £7bn sales.

. . . .

“It is a company that has managed to grow at the expense of companies that play by the rules. It doesn’t have to pay its taxes or go through any of the common practices that we demand of bricks and mortar companies. It sells its books as loss leaders in order to support nappies and batteries. An entire industry is being held hostage in Amazon’s pursuit of a wider market share.”

. . . .

A spokeswoman for Amazon made reference to statements Preston has made during the dispute.

She said: “Mr Preston says: ‘We have many loyal and committed readers. They listen when we speak. That represents power.’ He is completely missing the point. It’s not readers who should be listening to Mr Preston, but Mr Preston who should be listening to readers. And they have clearly expressed a preference for e-books priced less than $10.

“Even four years ago when readers expressed such a preference, Mr Preston responded by saying publicly, ‘The sense of entitlement of the American consumer is absolutely astonishing’. It’s pretty clear it’s Mr Preston who feels entitled. And what’s ‘astonishing’ is that he thinks readers won’t recognise an opportunist who seeks readers’ support while actively working against their interests.”

Link to the rest at The Guardian and thanks to Sharon for the tip.

Amazon-Hachette Debate Yields Diverse Opinions Among Authors

24 July 2014

From The Authors Guild:

The Authors Guild is committed to an inclusive, big-tent approach to its mission as the published writer’s advocate. The recent clash between Amazon and Hachette Book Group has called attention to the contrasting viewpoints of traditionally-published and self-published authors. During this dispute the Guild has spoken out against Amazon’s tactics—which needlessly imperil the livelihoods of authors who are not involved in the negotiations—while also challenging the major publishing houses to revisit the parsimonious stance they’ve taken on authors’ e-book royalties.

The Guild recognizes all authors’ rights to make a living from their books and to pursue the most suitable audience for them. It is a sign of the strength and diversity of our membership that two of our Council Members, Douglas Preston and CJ Lyons, have taken different public stands in defense of serious authors.

. . . .

In response to Preston’s letter to Amazon, self-published authors circulated a petition to Hachette asking it to “work on a resolution that keeps e-book prices reasonable and pays authors a fair wage.” Authors Guild Council Member CJ Lyons was a prominent signatory. In a cover letter addressed to their readers, the self-published writers praised Amazon for keeping prices low and the Amazon platforms for “giving all writers a chance to reach an audience.”

After these letters had been circulated, Authors Guild co-Vice President Richard Russo published an open letter taking the long view, noting that the outcome of the present dispute is dwarfed by the need for a healthy publishing landscape that can support a diverse and inclusive community of authors. “The primary mission of the Authors Guild has always been the defense of the writing life,” he began. “What we care about is a healthy [literary] ecosystem where all writers, both traditionally and independently published, can thrive.”

. . . .

“We’re committed to supporting working writers,” says Authors Guild President Roxana Robinson. “Writers should be able to make a living at what they do – which is to provide an essential contribution to society. However the publishing world changes, writers will still be crucial to it. No matter how the written word is distributed, only writers can write. They deserve respect and support.”

Link to the rest at The Authors Guild

David Gaughran had a comment to this post on The Authors Guild website:

The Authors Guild is a joke. How can you link to two of the petitions and not link to the one which has had the most overwhelming support? The Authors Guild is on the wrong side of history once again, just like it was about e-books, price-fixing, and Author Solutions.

And a comment from MPMcDonald64:

What I haven’t understood through this whole mess, is why the authors aren’t demanding better contracts from Hachette. Hachette is the entity who determines how much the authors earn–not Amazon. It would be like actors storming into movie theaters and demanding that the theater charge more for the tickets. That would be silly, when if they aren’t happy with their compensation, they should go to the people who write the check and negotiate a raise.

While PG would never ever suggest being rude to a mouthpiece for Big Publishing, visitors to TPV might also have comments for The Authors Guild.

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