Mike Shatzkin

What Oyster going down demonstrates is not mostly about the viability of ebook subscriptions

24 September 2015

From veteran publishing consultant Mike Shatzkin:

The news that the general ebook subscription offering Oyster is throwing in the towel was not really a surprise. The business model they were forced to adopt for the biggest publishers — paying full price for each use of a book with a threshold trigger at considerably less than a complete read while, at the same time, offering consumers a monthly subscription price that barely covered the sale of one book, let alone two — was inevitably unprofitable. Their only hope was that they’d build a large enough audience fast enough that publishers would become in some way dependent on it (if not the revenue it produced) and agree to different terms.

It would be a mistake to interpret Oyster’s demise as clear evidence that “subscriptions for ebooks don’t work”. Obviously, they can. Safari has been a successful and profitable business for nearly two decades. The Spain-based 24Symbols has been operating an ebook subscription business, mostly outside the US and mostly not in English, for too many years to be running exclusively on spec VC money. Scribd has very publicly (and a bit clumsily, in my opinion) adjusted their subscription business model to accommodate what were unprofitable segments in romance ebooks and audiobooks, but the inference would be that for other segments the business model is working just fine. And then there’s Amazon’s Kindle Unlimited, which is sui generis because they control so many of the parts, including deciding more or less unilaterally how much they’ll pay for much of the content.

What seemed obvious to many of us from the beginning, though, was that a stand-alone subscription offer for general trade books could not possibly work in the current commercial environment. The Big Five publishers control the lion’s share of the commercial books that any general service would need. All of those publishers operate on “agency” terms, which makes it extremely difficult, if not impossible, for a subscription service to pull those books in unless the publisher allows it. The terms that the publishers would participate in the subscriptions required, which were, apparently, full payment for the book after a token amount was “read” by a subscriber, combined with a limited number of titles offered (no frontlist), made the subscription offer inherently unprofitable.

The publishers see the general subscription offers as risky business for books that are currently selling well a la carte. Not only would they threaten those sales, they threaten to convert readers from a la carte buying to going through the subscription service. To publishers, this just looked like another potential Amazon: an intermediary that would control reader eyeballs and have increasing clout to rewrite the terms of sale.

. . . .

So the failure of Oyster is actually another demonstration of a “new” reality about book publishing, except it is not so new. Book publishing — and book retailing — are no longer stand-alone businesses. Publishing and bookselling are functions, and they can be quite complementary to other businesses. And as adjuncts to other businesses, they don’t actually have to be profitable to be valuable. What that means is that entities trying to make them profitable — or, worse, requiringthem to be profitable to survive — are at a stark competitive disadvantage.

. . . .

The story on Oyster, still incomplete as of now, is that a lot of their management team is on its way to Google, which, in effect, “bought” the company to get them. Google seems to be trying hard to make sure we don’t think they bought Oyster’s business, they just bought Oyster’s staff. Obviously, Google fits the description of a company with many other interests in which books can play a part. In the beginning, that was all about search. Now it is also about the Android ecosystem and media sales in general. An ebook subscription business, or even a content subscription business, could make sense in Google’s world. But it would be a relatively small play for them. My hunch, and it is only a hunch, is that they have something other than a mere “book subscription service” in mind for that Oyster staff to work on. Smarter observers than I seem to believe that the personnel Google recruited give them knowledge about Oyster’s mobile reading and discovery technology. Of course, that’s core information for Google.

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

Barnes and Noble results and the latest news from Perseus

15 September 2015

From Mike Shatzkin

The most recent Barnes & Noble financial results — which appear to have discouraged Wall Street investors — aren’t good news for the book business. They show that the sale of books through their stores is flat at best, as is the shelf space assigned to books. And it would take a particularly optimistic view of their NOOK results to see anything but an accelerating slide to oblivion for what was, for a time a few years ago, the surging challenger to Kindle.


The real failure we see at B&N, which almost certainly affected the NOOK business as well as the stores, was that the customer knowledge within the dot com and NOOK operations apparently has never been used on behalf of the store business. This might be blamed on organizational silos that ran these three components as separate businesses. The failure is otherwise hard to explain. How hard can it be, really, to dig up email addresses of people who bought a book by a particular author to let them know s/he’ll be autographing books near where they live sometime soon?

Or, putting that in terms Barnes & Noble should relate to, might you not be able to charge the publishers a promotional fee for doing that? (AND you’d drive more traffic and sell more books!)


The people who own and run B&N are plenty smart. Before the game changed and was complicated by the online option, they had organized their supply chain to give them real competitive advantage over Borders and all other book retailers. But they were tripped up by a combination of Amazon’s longer-term view as an upstart in the 1990s and early 2000s when B&N was an established and profitable company. This was a classic “innovator’s dilemma”, failing to employ a new technology to maximum advantage because a legacy position was being defended.

Amazon was willing to lose money for many years to build its customer base. That was how they could build their stock price. B&N was a profitable company at the top of their category. Profits were how they grew their stock price. This not only discouraged deep investment in the early years of online bookselling, it discouraged the kind of discounting from their online store that Amazon did. Both of them knew that discounted books online put competitive pressure on the brick-and-mortar business. That was fine with Amazon. It was not appealing to Barnes & Noble.


When B&N decided to go after the ebook market with the NOOK, organizationally they did it with a dedicated and largely independent effort, not an integrated one. That might have been necessary. But it also might have been B&N’s last chance to build on its one distinctive advantage: having a strong store base and a real dot com business. (Borders never had the latter and Amazon, of course, doesn’t have the former.)


But the time B&N has to change the reality that they can’t seem to grow their market share continues to shorten. The one big advantage they are likely to retain over their competitors in Seattle — who are certainly growing theirs! — will be a cooperative attitude from the publishers, who live in fear of Amazon’s growing power. But even that advantage has its limits.

Link to the rest here.

As a long time reader of Mikes blog I have to say this is one of his better posts. Some of this will no doubt be read by many here as information they already had, but the break-down is spot-on.

As for the changing landscape of B&N and its effect on the Big Five Randall views it as self-fulfilling. The dwindling shelf space at B&N will eventually lead to only the bestsellers being available. This will reduce the mid-list titles to an even smaller portion and effectively lock the Big Five into the blockbuster model for the remainder of their existence.

However, if you find yourself in sudden need of a birthday card, stuffed animal, calendar, scented candle and cup of coffee, B&N is your place for one-stop shopping. 

The publishing world is changing, but there is one big dog that has not yet barked

5 August 2015

From veteran publishing consultant Mike Shatzkin:

Recent data seem to show that, for the publishers, the growth in the retail ebook market has slowed down or stopped (at least for the moment), while Amazon’s ebook sales apparently continue to grow. The share of the market controlled by the publishing establishment — the Big Five publishers and others — is starting to be slowly eroded. This does not yet suggest that an author’s best bet is to go out on his/her own and we may be a very long way from that. But it does suggest that life may get increasingly difficult for publishers.

The headline data we saw last week is that Hachette’s ebook sales went down last year. All their sales declined, but ebooks fell faster and the percentage of their business in ebooks is diminishing.

. . . .

What we’re also seeing and hearing is that publishers might have boxed themselves in with their return to agency pricing. When publishers first “raised prices” by instituting agency pricing for ebooks in 2010, they saw no reduction in ebook sales, which continued to grow. Michael Cader’s analysis (can’t find it in print, but he told it to me) was that publishers may have misread the real impact of price increases because they raised them in a growing market. The number of ebook readers was increasing every day, so those who were put off by the high prices were outnumbered by the new entrants who just wanted to read their books digitally on their shiny new devices.

Whatever is the reason, the anecdotal reports I’m getting suggest that the price increases aren’t being so easily swallowed in the current round of Agency pricing. Amazon may not care about ending discounting from those prices because they don’t need to or want to, but it would appear that the new deals won’t let them. They certainly don’t have the flexibility to do so that they did before Agency came to the marketplace. So the sometimes startlingly high publisher-set prices are prevailing. And, aside from the Hachette numbers that were reported, we’re hearing widespread but totally unofficial reports that big publisher ebook sales are dropping noticeably when their new higher agency prices are activated.

Hugh Howey told me this was happening in a private exchange three months ago. I didn’t believe him. I do now.

. . . .

Amazon’s Kindle Unlimited may be having a bigger impact on the overall market. In all these cases, it is the public understanding that the subscription services are “purchasing” the ebooks from the established publishers. (Kindle’s own authors are compensated with a “by the page read” division of a pot that Amazon arbitrarily decides.) But the Big Five aren’t participating in KU and they aren’t putting their new books — the biggest sellers with the highest prices — into the subscription services. So all the reader bandwidth and revenue going through those services might be coming out of the big players’ and big books’ share.

Our friends at Ingram told me another piece of anecdata which may also be at play. They keep track of the number of SKUs that sell 100 copies or fewer and those that sell 10,000 copies or more. The aggregate sales of the former group is growing; the aggregate sales of the latter group is not. What that suggests is that the sales of books that are not really commercial are taking share away from those that are, whether those that are come from publishers or indie authors like Hugh Howey. Whether that particular change is yet impactful, it is inexorable.

. . . .

The reduction in ebook sales of hot new titles could be starting to affect future deals — one agent told me unambiguously that it is visible — which would be the next step in the indie vision of how publishers disappear. Publishers base their advances on revenue expectations, which, for ebooks, might now be diminishing.

. . . .

What is definitely true is that the share of the reading market held by commercially-minded publishers (not just commercial “for profits”, but also university presses) will diminish as both successful self-published authors and hundreds of thousands of others who don’t succeed (and maybe don’t even care) take their content to market on their own.

Link to the rest at The Shatzkin Files

Authors marketing themselves online: the components of a strategy

31 July 2015

From veteran publishing consultant Mike Shatzkin via Book Machine:

A range of useful options is available to any author as they consider their online presences. All can be useful to any author but their own website is an essential component of that. It’s an anchor and it is the only web presence the author knows s/he will always control.

An author’s objectives for a website should be to:

  • Make it crystal clear to search engines who the author is and for what they are an authority.
  • Give the author a platform that can be used for many things: blogging, posting parts of books or works-in-progress, and gathering email addresses.
  • Give fans of the author a sensible place to link to an author’s content and biography that is not called Amazon.com.
  • Collect data that is independent of any specific book’s sales that can help an author know how s/he is doing in the digital world.

In addition to a web site, which is real estate an author totally controls and is the most important tool in an author’s kit to get new followers through search, an author can do him or herself some good by going where fans could be.

. . . .

And authors should be in touch with other authors too. They have blurbed for each other’s books for years. Now they can link to each other. They can mail to each other’s fans. No author is so prolific than s/he needs to “own” fans exclusively.

Link to the rest at Book Machine

Another wake-up call from Amazon as they serve author interests better than publishers have

24 July 2015

From veteran publishing consultant Mike Shatzkin:

Although those fighting Amazon can and will point to what they consider to be situations where Amazon takes unfair advantage of its marketplace position, there are two aspects of what has transpired over the past 20 years that the critics who plead for government intervention will almost certainly ignore.

Most of Amazon’s success is due to their own stellar performance: innovating, investing, executing, and having a vision of what could happen as they grew.

Most of what Amazon has done to build their business — almost all of what they’ve done until the past few years of Kindle dominance — benefited most publishers and helped them grow their sales and their profitability. (In fact, book publishing uniquely among media businesses didn’t fall off a cliff in the decade surrounding the millenium and a strong case could be made that Amazon actually saved them.)

This has not stopped. The most recent example was announced yesterday. Amazon is now enabling readers to sign up on their favorite authors’ pages for notification of forthcoming books. This once again demonstratesAmazon’s willingness to innovate. And by doing this they also will deliver benefits to the publishers — an increase in out-of-the-box sales of new books to the authors’ sign-up lists. But the chances are that authors will be more appreciative than publishers will. That aspect of this initiative then feeds into the meme that “Amazon is taking over!”

. . . .

When we talk about author websites, we stress the importance of building the fan base in size and intensity. Among the big literary agencies investing in helping authors with their digital presence (and many are), we helped one figure out the techniques to teach to help their authors gather mailing list names.

. . . .

Now Amazon has, in their typical way (simple and self-serving) made this incredibly easy. We’ve met publishers who wonder why an author would need a website of their own rather than just a page on the publisher’s site. There are a lot of reasons that might be true, including many publishers’ apparent reluctance to “promote” the books an author has done with a prior publisher. But now publishers might hear authors asking the question a different way. Why do they need any author page on the Web besides the one they get from Amazon?

. . . .

But the single most important thing an author would want to tell his/her fans is “I’ve got a new book coming” and Amazon has handled that.

And in so doing, they have increased the control they have of the book marketplace and highlighted once again that part of the ground they take is ground the publishers simply cede to them. Any publisher that is not helping authors engage with their readers and actively create their own email lists to alert the interested to new books is put on notice now that they are quite late. But one thing is still true: better late than never.

Link to the rest at Mike Shatzkin and thanks to Chris for the tip.

Publisher strategies around first serials pretty obviously need to be rethought

8 July 2015

From veteran publishing consultant Mike Shatzkin:

This Friday, newspapers on both sides of the Atlantic — the Wall Street Journal in the US and the Guardian in the UK — will publish the first chapter of the much-awaited Harper Lee novel, “Go Set A Watchman”.

. . . .

I have not seen any reports detailing whether any money changed hands for the rights to publish these excerpts. But, unless it was a lot of money — an amount worth reporting — doing first serial this way of such a newsworthy and anticipated book seems like an anachronism, a mistake.

In the pre-internet days, first serialization to magazines or newspapers was both a way to get substantial revenue (which in most standard contracts was largely delivered to the author) and, certainly more important to the publisher, a way to jump-start awareness of the book and add some firepower to propel the first week of sales that is so important to bestseller list positioning.

But what was true in a print world is not true in an Internet world.

Most people who read the first chapter of “Go Set A Watchman” on either newspaper site will almost certainly not be a regular reader of either newspaper! They will have gotten to the excerpt some other way, through some other link or discovery point. So the “contribution” of awareness and readers from the Guardian or WSJ is likely to be far less than the additional traffic sent to them by the power of the publisher’s content. That’s a hint. It’s backwards!

Just think about what the publishers are giving up by doing these deals. All that traffic and a slew of Google-juicing inbound links could have been coming to their site. Competitors to the Guardian and WSJ, who will probably be reluctant to drive up traffic at a rival, might not link to it, but almost certainly would have if the excerpt were on a book publisher’s or author’s site. The publishers have given up the potential to get email names — perhaps hundreds of thousands of them or more — in exchange for the privilege of reading a bit beyond the first chapter or some other perk. The publisher hosting the content could aggressively upsell the book or ebook, and be driving traffic to their retailer partners, which gets them both goodwill and affiliate revenue. (How far would that affiliate revenue go toward covering any licensing fee they collected?)

Excerpts of major book releases are, in and of themselves, news events that many entities would want to “cover” and would happily link to.

Link to the rest at The Shatzkin Files

The establishment seems very unworried about being toppled by indies, and 5 other learnings

30 June 2015

From veteran publishing consultant Mike Shatzkin:

Programming Digital Book World and the kind of consulting we do require that we spend a lot of time in our office trying to figure out what the industry should be thinking more about.

. . . .

A recent DBW agenda planning meeting, which had participation from most of the ten biggest trade publishers, some literary agents, and service providers ranging from marketing services to digital distribution providers, yielded a lode of really interesting ideas that we’re going to act on.

1. One thing that came through loud and clear was big publishing’s interest in hearing how books fit in the greater landscape of digital change. They want to hear from curators of other media and online retailers from other businesses about how they learn about their customers, position a variety of products, and work with search and social media.

2. One participant, whose business provides digital sales data and analytics to a variety of clients, posited that there are four “stages” of behavior that we want to watch around consumer interaction with books. His paradigm is that we want to know:

  1. How they find out about the book
  2. How they purchase the book
  3. How they read, or navigate, the book
  4. How they talk about the book

. . . .

Publishers want to concentrate marketing efforts where the decision is made, not necessarily where the transaction occurs. And, in fact, we’re figuring that as time goes by, more and more ebook readers will buy on the particular platform they most favor regardless of where they learned about the book.

. . . .

I’d be a lousy blogger if I didn’t save best — or most proactive — for last (except in the post titling, of course). I told the assembled group that I wanted to do a panel on “the future for indie- and self-publishing.” There was remarkably little interest in the subject from those in the room. One literary agent said, “four years ago, indie publishing had us quaking in our boots. We really wondered whether our whole business model would be upended. We don’t worry about that anymore.” Another said “we counsel our authors about self-publishing, but there is less interest in it and less of a rush to it than there was a couple of years ago.” The publishers were similarly relaxed about whatever “competition” self-publishing offers.

So, from the perspective of the publishing establishment, the whirlwind of change has slowed down, we are in a “new normal” and there is absolutely no shortage of writers pining to be published for the deals the industry is offering and the output from those willing writers continue to deliver sales that keep big trade companies profitable. If self-publishing is constituting some mortal threat to everybody’s existence, that appears less evident today than it did a few years ago. And, of course, every big publisher is set for the next X years (unknown numbers that might be different for every big publisher, but almost certainly three or more for all of them) with their single biggest intermediary relationship since they’ve all just done deals with Amazon. One big variable in their commercial calculus that had been highly problematic in the recent past is now stable for a while into the future.

Link to the rest at The Shatzkin Files

The publishing business as we have known it is not going away anytime soon

11 June 2015

From veteran publishing consultant Mike Shatzkin:

A friend who has actually been working fulltime in the book business since I was still in college and who remains active was speculating at BEA about the “next big disruption” in our business. He’s expecting it sometime pretty soon.

I don’t think I am.

Gareth Cuddy is one of the most practical service providers in the industry. His Vearsa ebook distribution company is providing global services to publishers large and small and he is a pioneer in reading and sales analytics. He recently wrote a piece that concludes “whatever emerges from this next phase will surely be a complete departure from what we understand today as an industry” with timetables around it wondering whether 2016 will be too late to respond and whether we’ll have an unrecognizable industry in 2020.

I don’t see it.

One of the disruptor-authors, one who studies the industry trends closely with special attention to indie author growth, told me he “is pegging 2019 as the year that major media outlets cover the collapse of the major publishing houses the same way they started reporting on newspaper declines last decade”.

I wouldn’t be surprised to see a merger or two by then, but “collapse”? I don’t see that either.

. . . .

[after listing and describing all the various sources of tradpub sales data]

Despite and because of all the sources, the data is incomplete and scattered. There is inevitable ambiguity in interpretation so that a variety of conclusions can be reasonably drawn. From the big publisher perspective, it would appear that sales are about flat and that the ratio of print and digital sales has become pretty stable. This is true in an environment where publishers have experimented with even higher ebook prices and, for a variety of contractual and commercial reasons, discounting of ebooks has diminished. But that’s been true for a relatively short period of time, and the ebook reporting is routinely delayed by three months, so we don’t have enough evidence to know for sure that higher ebook prices are sustainable in this marketplace. And even if they are sustainable today, that doesn’t prove they will be in three months or a year.

On the print side, Amazon continues to be the largest single customer for almost every publisher. And even though they have managed to increase their discounts and various marketing fees and their returns have creeped up, they are still the most profitable large account for many, if not most, publishers. Since Borders went down several years ago, Amazon has, indeed, grown, but independent stores have also thrived and become more numerous. And although Barnes & Noble still slowly shrinks in sales, it remains the most important account for “breaking” many new titles and still provides more sales to most publishers than all the indie bookstores combined.

While I’ve been working on this piece, the AAP data has been being worked through. Nate Hoffelder (whose blog has been renamed “Ink, Bits, and Pixels”) scoffed at the Nielsen claim that their hard numbers constitute 85 percent of the book market. The AAP, which like Author Earnings, uses modeling and guesstimating to get from the data they have to a bigger industry picture, sees a much bigger trade industry. The point Nate wanted to make, using the AAP data (echoed by an indie author friend of mine who believes that the indies are toppling the establishment and we’d all know that if we knew the “real” numbers that didn’t leave out all the indie success stories) is that the ebook market is not shrinking or flattening.

. . . .

I asked my knowledgeable indie author friend what he thought the consumer dollar volume was for indies last year. He reckoned it at $459 million (I love the presumption of precision: not $450 million or $475 million, but $459 million!) Since the AAP figures adult trade fiction and non-fiction at about $10 billion (and the juvie numbers, another $5 billion, actually have some big “adult” sales in them), he is implicitly acknowledging (but would never say explicitly) that indies are 5 percent of the adult business at retail, using what I’m sure is the most ambitious estimate of indie sales you’ll see anywhere.

. . . .

Trying to view things from the author perspective requires one to divide them into at least three big “buckets”: successful authors who know where their next totally-acceptable contract that pays them a living wage in advance to write a book is coming from; aspiring authors who either can’t get an agent or a deal or have decided that with self-publishing working as it does that they simply don’t want one; and the ones in the middle, who might have an agent or have had a deal or two, but aren’t really making a commercial success of authorship.

. . . .

For those authors who are working steadily and profitably for publishers, self-publishing has offered the possibility of greater control and bigger margins: more profit if they can achieve the same level of sale. This is not an opportunity very many authors in this category have pursued. That has surprised me a little bit, but probably it shouldn’t have. Being a publisher is a lot of work and no small risk. If an author is making a living doing the writing and letting a publisher handle the rest, that’s damn near nirvana. Very few in that position want to abandon it.

. . . .

So another source of potential disruption — authors abandoning publishers to do it themselves to make more money per unit and claim greater control of their work and career — has also not really happened. I was among those who expected, during the era of dizzying change we experienced for a few years until a couple of years ago, that publishers could have a big problem holding on to their biggest stars.

Both the supply (authors) and demand (sales channels) sides of the equation appear more stable than they’ve been in recent memory. But there’s no guarantee they’ll stay that way. The number of self-published titles keep growing by a million titles a year or more. They sell a paltry average per title, and a very small percentage sell a measurable amount at all, but cumulatively, their sales add up. Most of the revenue from that growing market segment goes to Amazon and a very small share of it goes to print or brick-and-mortar. Amazon’s growth in any way fuels their ability to be tough on terms, reducing publishers’ margins. (One big potential wild card is Amazon’s pressuring publishers to allow them to manufacture more and more of the inventory; that could be a paradigm-shifter if they succeed in making it widespread.) And more ebooks, particularly indie ebooks, and the subscription services for ebooks also tend to force down retail prices, which puts further pressure on publishers’ margins.

. . . .

I wouldn’t be surprised to see only two or three big trade publishers as soon as ten years from now. I’d expect that the two recent plateaus we’ve reached, with ebook sales stabilizing in relation to print and with bookstores holding their own, will prove temporary. I wouldn’t expect ebook sales or online purchasing to grow by the leaps and bounds they did a few years ago, but it would surprise me if we’ve reached any long-term limit, particularly in ebook use. (The devices keep proliferating and people get increasingly comfortable reading for a long time on screens.)

Link to the rest at Mike Shatzkin and thanks to Andrew for the tip.

UPDATE from Felix in the comments:

The biggest disruption is well on its way: the diminished importance of the BPHs. Best highlighted by the recent Nielsen fiasco.

And the only reason he doesn’t see the big guys bolting (yet) is because the decline has only now starting to hit their pocketbook.

But even when they do start to defect, that won’t be the kiss of death. The kiss of death has already been administered. It’s a slow acting poison but will kick in over time.

The BPH killer isn’t losing today’s Bestsellers, it’s losing tomorrow’s best sellers.

And no, they still don’t see that.

Considering the very wide range of digital change topics that should be candidates for discussion at DBW 2016

28 May 2015

From veteran publishing consultant Mike Shatzkin:

The challenge for the book business for the past decade has been rapid and less-than-predictable changes in the ecosystem because of digital. There are two underlying shifts that fundamentally alter the ecosystem: people substituting ebook consumption for print book consumption and people substituting online purchase of printed books for buying them in stores.

. . . .

1. Data. This is a wide-ranging topic. We look for original data about what’s going on in the ecosystem wherever we can find it and we have done sessions in the past (and could again) about “Big Data” and what publishers need to understand about it. With pricing of ebooks becoming an increasingly important financial consideration for publishers and data being such a crucial component of doing that well, this is bound to remain a top-of-mind subject.

. . . .

4. Authors and self-publishing. Authors didn’t used to have much alternative to publishers; now they do. As a result, authors have developed marketing capabilities and support services have grown up to help them. This all raises a host of issues for publishers. They have to learn how to capitalize effectively on what authors can do on their own, but they also need to provide great marketing support to authors and be seen as collaborative and as adding real marketing value.

. . . .

8. Agents and editors, how they relate in a mutually-supportive way. They share ownership of each author’s personal loyalty, they both might shape the book editorially, and they both will hear the author’s career ambitions and influence him or her about self-publishing and their publishers’ efforts. If publishers are going to start collaborating meaningfully with authors about marketing, that suggests agents and editors are going to be working together differently.

Link to the rest at The Shatzkin Files

My personal list of what should be top-of-mind for publishers around digital change today

20 May 2015

From veteran publishing consultant Mike Shatzkin:

What are the most important digital change issues publishers face?

. . . .

1. Ebook pricing. Publishers get anywhere from 50-to-70 percent of the retail price from most ebook retailers. Unlike the print world, where price-setting must take place before the book comes out and is, because the price is printed on the book, very hard to adjust, ebook prices can be changed quickly and frequently.

Pricing variation has historically been the province of the retailer. In the physical world, markdowns were almost never shared: the retailer voluntarily gave away part of their margin to gain market share or to build customer loyalty.

In the agency world that four of the Big Five have now created (with Penguin Random House almost certain to follow on), pricing is not only mostly controlled by publishers, they are the direct beneficiaries of higher prices and lose margin if prices are lowered.

It is true — and the indie authors who like it better when Amazon is in control rather than the publishers often point this out — that publishers have almost no experience with pricing and the impact of changes. But it is also true that the retailers, who do have more experience with it, have different objectives than publishers. Retailers want a competitive advantage against other retailers and, as part of that, they want to build customer loyalty. Publishers want to maximize revenue for each SKU, build awareness of authors, and use one book by an author or in a series to sell other titles under the same brand.

Publishers are starting very near zero on knowledge. How does discounting one title in a series affect the audience’s likelihood of getting started with it and then buying other titles at higher prices? If a book is in the news, is the right strategy to raise the price (to maximize revenue) or to lower the price (to get better market penetration on the back of the news). And is the strategy the same if the story is about the book, rather than the book being about the story? Do pricing strategies need seasonality rules, and how is that different across genres or topics?

. . . .

7. Allocating effort across a large backlist. The biggest opportunity and the biggest challenge for publishers, as they have historically operated and as they are currently structured, is maximizing their opportunities across their backlists. The big houses are dealing with many tens of thousands of titles. We advocate techniques that require some human application so scale techniques have to be used to pinpoint the titles worth an effort.

Although we are developing tools to help digest the external cues that might affect where the focus should be — cues from the news and social graph — each publisher has to start with a combination of knowledge of the list, intuition, and a sense that sales can be improved to pick those titles worth reviewing for better audience understanding and descriptive copy improvement. Almost certainly, titles that are more than a couple of years old will need work for several reasons: the house knew so little about SEO when copy was written; time will have changed the search terms that matter; and reviews and awards and other things from the book’s experience in the marketplace might need to be incorporated.

Link to the rest at The Shatzkin Files

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