PG’s Thoughts (such as they are)

Are the tech giants too big to be good partners for book publishing?

22 August 2017

From veteran publishing consultant Mike Shatzkin:

An online discussion forum that includes publishers and librarians and tech people usually sends me several emails a day. About 10 days ago, a conversation evolved about Google Book Search and the Google Library Project, two initiatives by the search giant that were initiated in the early part of the last decade.

Because both programs essentially gave Google a trove of book-published content for full text search, there was a wariness among the publishing community about them when they started. In time, publishers (through the AAP) sued Google and the course of the lawsuit ultimately led to a sharp curtailment of Google’s ability to just do the scanning. After a while, it appears the reservoir of interest at Google for the project, which started as more of a “service to humanity” idea than a profitable one, just evaporated. The scans that Google had already done became part of the HathiTrust repository of content, an important research and scholarship tool in the non-trade world without any recognition or impact on the trade world at all.

. . . .

And, of course, Google is the single most powerful source of “discovery” and many in publishing wonder if books overall would have benefited from Google being more “knowledgeable” about what is inside of them.

So, to this day, years after the litigation and the scanning program have concluded, there is a division of opinion in the publishing community. Some see Google as a bully and a villain, trying to make its own rules to benefit from publishers’ content and crippling the value of copyright. Others focus on the lost opportunity and believe publishers would actually have more valuable intellectual property (more valuable copyrights!) today if they’d just allowed the Google programs to develop and flourish.

. . . .

In the course of the discussion, a very knowledgeable and experienced veteran of publishing across education, professional, and trade offered the comment that “Google is a terrible partner.” I asked him (offline from the group discussion; he’s a friend) to amplify that.

My points of context for Google weren’t in publishing; they were in tech. My own most extensive experiences with the big three tech companies that publishers dealt with — Amazon, Apple, and Google — was working out their participation at publishing conferences.

. . . .

What I saw was that Apple was the most uptight; it was hard to get speakers because messaging was so tightly controlled by upper management.

Amazon would sometimes be very agreeable, but primarily when they had an agenda: some program they wanted to get across or some point they wanted to make. So they were often cooperative, but very much on their terms to put across their message du jour. In general, they wouldn’t do panels or Q&As. They needed to control the conversation and skillfully avoided being pushed to publicly discuss anything they didn’t want to talk about. But they were often available and always interesting, and unlike Apple (in my experience), would engage with you honestly about their agenda.

. . . .

Google was, in my experience, by far the most open and accessible of the three companies. You could tell them you wanted speakers or panelists to cover one subject or another and you’d get directed to people who could help you. And Google employed a pretty fair number of ex-publishing people who were conversant about issues from a perspective that publishers could relate to.

. . . .

What my friend said in response to my inquiry, in which I had only mentioned Google, was, “Google, Apple, and Amazon are all bad partners. Ingram, Baker & Taylor, and Firebrand are good partners.”

So much for my contextual frame.

But grouping the three to me made the point that my context was what mattered. Ingram, Baker & Taylor, and Firebrand all make their living in the book business. Google, Apple, and Amazon have a financial stake in the book business that amounts to a small rounding error to their overall financial performance.

. . . .

For the entire life of the book business until about fifteen minutes ago, it was very much a free-standing industry. The only larger-than-the-industry enterprises it had to deal with were the Post Office and United Parcel Service. Our authors, designers, typesetters, printers, and, most important of all, customers to which we shipped directly (the wholesalers and retailers and libraries) were part of the publishers’ world. They depended on the publishers as much as the publishers depended on them.

Amazon was the first piece of evidence — and still the most important piece of evidence — that the old world has disappeared.  . . . . They sell more than half of the books for most publishers, but all the books they sell probably amount to less than 5 percent of their total margin. And while Penguin Random House may be in the neighborhood of half the consumer book sales overall, they wouldn’t amount to nearly that big a percentage of Amazon’s book sales because Amazon gets a disproportionate share of professional and other niche markets and thus from publishers who don’t compete at all with PRH in the consumer market.

And because Amazon has very intentionally created a whole massive pool of consumer books that nobody else has, through their own publishing and enabling independent authors.

Link to the rest at The Shatzkin Files

PG has had direct business/legal dealings and negotiations with Apple and Amazon over the last 15 years or so. For context, he has also had business negotiations with Microsoft, Oracle, Hewlett-Packard and Intel in the tech world plus every major investment bank in New York (Goldman Sachs, Morgan Stanley, etc., etc.), most of the large accounting firms plus Disney, American Express and a bunch of other big companies.

To be clear, this doesn’t mean PG knows everything about negotiating intellectual property partnerships and other deals with large organizations, but he does know some things about that subject.

PG definitely has not represented any large publishers in their dealings with large tech companies. He has, however, represented a lot of authors in their dealings with large publishers.

Speaking generally, large publishers are not cut out to be good partners for tech companies.

Publishers are simply too rigid in their business vision and very much focused on the short term (which is strange for organizations the license copyrights, which extend far into the future).

This short term outlook is substantially affected by the fact that the Big Five publishers are all owned and controlled by other and larger media conglomerates. Four of the Big Five are owned by large European publishing corporations that are not known for their commitment to innovation and could not be described as tech-savvy in any sense. The fifth Big Five publisher, Simon & Schuster, is owned by CBS.

Each of these media conglomerates is heavily focused on this quarter’s and this year’s income, expenses and profits. They’re not what anyone would call forward-looking or focused on the long term. If they think about the long term at all, they’re convinced it will not be much different than last quarter.

(PG worked for a major subsidiary of a very, very large international media conglomerate for three unhappy years and knows that of which he speaks.)

This means that if Google sends someone to talk to the President of a Big Five publisher, Google is talking to a middle-manager in a much larger business organization. The Big Five President can do pretty much whatever he/she wants to do with Barnes & Noble and Ingram (as long as it doesn’t have an adverse impact on profits), but cutting a strategic deal with Google is way, way out of his/her job description.

Organizations like Google, Apple and Amazon quickly become frustrated with organizations that are not able to move rapidly.

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iPad vs Mac: Episode 7

21 August 2017

From Monday Note:

With the sophisticated user interface and powerful system apps afforded by iOS 11, the iPad feels like it’s finally reaching maturity. But what does the device’s clarified identity say about the Mac’s future?

The iPad is a strange animal, a Chimera that has had trouble finding its place in an Aristotelian classification of computing creatures. Is it a smaller PC, a bigger phone, something else? During the January 2010 iPad unveiling, Steve Jobs briefly departed from his usual razor-edged storytelling to admit ambiguity about the identity of his latest creation:

“[iPad] has to find its place between the iPhone and the Mac”

Jobs’ hesitancy proved to be insightful. In fact, exceptionally so: Seven years later we’re still debating what the iPad actually is. The meteoric rise followed by a three year slump didn’t help clarify the iPad’s place in the world.

. . . .

Tim Cook has long professed his faith in the iPad’s future:

“The iPad is the clearest expression of our vision of the future of personal computing.”

Does the iPad’s rebound prove him right? Does Cook’s proclamation mean that the iPad is destined to replace the Mac? This question — perhaps I should say ‘agitation’ — was raised when the iPad came out and continues to this day.

In the Socratic spirit I referred to in last week’s Monday Note, I’ll take both sides of the argument…

It’s abundantly clear that the iPad will continue to replace the Mac.

. . . .

By offering flexible user interface choices — touch only, Smart Keyboard, Pencil — iPad Pros will not only compete with the Mac, they’ll surpass the laptop.

The iPad also wins the price war. Prices range from $329 for an entry-level 9.7” iPad to $1099 for a 512Gb 12” iPad Pro. Add a keyboard and a Pencil to a fully decked 10.5” iPad Pro — it has a better screen than its larger cousin — and you’ll top out at $1212.

. . . .

Although the Mac still brings in more money-per-device — the Mac’s ASP of $1,303 is three times that of the iPad’s $435 — the company’s mobile devices make it up in volume. Last quarter, Apple sold more than 55M iOS devices (iPhones and iPads), compared to 4.3M Macs.

. . . .

As it becomes a more general-purpose machine, the iPad will continue to steal uses and users from the Mac. As often stated by its execs, Apple isn’t worried about cannibalization. More important, the iPad’s ever-improving UI and functionality will wrest users from its competitors.

This leaves the Mac line doing nicely for two disconnected reasons: High-end “truck-like” applications, and the estimable population of users who, as a matter of personal preference, opt for the traditional “horizontal-hands” UI.

Link to the rest at Monday Note

With due respect to all his Mac friends, PG says Apple is mostly a phone company. A quick check discloses that the iPhone has represented over 50% of Apple’s revenue for almost five years, nearing 70% during several quarters during that time period. The iPad and Mac aren’t what make Apple the company it is today. If the iPhone misses a beat, Apple will shrink quite rapidly.

PG started in DOS when dinosaurs roamed the earth, then transitioned to Windows. A few years ago, with the help of one of PG’s Apple-bedazzled offspring, he bought a top end Mac laptop with appropriate software, but, despite using it as his principal computer for a few months, the magic just wasn’t there for him.

One of the problems was finding Apple versions for the zillion little non-mainstream software programs PG has built into his daily workflow and which either save him lots of time or provide extra security for the confidential information he has on his computer.

An example? Autohotkey , an open-source macro program.

PG’s use of macros dates back to WordPerfect, a perfectly lovely word processing program (far better than MS Word is, even today, in PG’s stunningly humble opinion) that was acquired by Novell, another essentially extinct company, and died a quick death thereafter. (PG knows Corel still produces a product called WordPerfect, but it bears as much resemblance to the real thing as a dinosaur skeleton does to a living velociraptor.)

PG had over 150 WordPerfect keyboard macros that he used in his daily work. With them, he could move like a rocket in his law office. In some cases, he could literally finish a document for which lawyers typically charged the equivalent of a four-figure fee in today’s dollars before the client finished writing a check to give to PG’s paralegal to pay for the document.

Any legal documents PG produced on a frequent basis were macro’d to the max.

He practices a much different type of law today than he did in that day, but still uses Autohotkey keyboard macros for his legal work, his blogging and to make things a bit zippier in the Lair o’ PG. Examples of macros used frequently on TPV are ltr – “Link to the rest at”, ttt “and thanks to ______ for the tip.”, tpv “The Passive Voice” and lwsj “Link to the rest at The Wall Street Journal (Link may expire)”.

One of the earliest macros PG remembers reading about was used by a prolific author who used an ancient word processing program called WordStar. The macro inserted a period, then a closed quotation mark, than an Enter key, then a tab for the next paragraph, then an open quotation mark. He used it for finishing one paragraph of dialogue and beginning the next:

words, words, words[.”

“]Words words words

If you type at 65 words per minute, you are using approximately 20,000 keystrokes per hour. If you can make some of those keystrokes instantly produce much more than a single character each, your productivity could increase.

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New WordPress Theme for The Passive Voice

18 August 2017

PG has decided it’s time for a new WordPress theme for TPV.

He still likes the look of the current theme, but it hasn’t been upgraded by the theme’s author for a long, long time and PG is concerned about plugin compatibility (it definitely won’t work with a couple of newer plugins PG wants to use) and security issues that may originate from an aged theme.

PG also thinks a well-designed new theme might improve some performance parameters for the blog to everyone’s benefit.

Long-time visitors to TPV will remember that PG tried a new theme a few years ago and the consensus of the TPV regulars at the time was that it was a step down from the previous (and current) theme, so PG switched back.

PG is hereby soliciting suggestions for a new TPV theme.

Here are things PG will be looking at:

  1. Two columns in the approximate configuration of the current theme.
  2. A background/color combo that’s easy for eyes of all ages to read on a variety of screen sizes. PG is assuming that any theme he chooses will be phone/tablet friendly automatically out of the box.
  3. Either a color combination that’s close to the current one or a combo that says “reading and books.” (PG can’t be more specific, but he’ll know it when he sees it.)  A configurable theme that permits a wide variety of PG-configurable color combinations is a definite plus.
  4. Fast loading for as many devices and connection speeds as possible is important.

If you would like to nominate a WordPress theme for soon-to-be-enhanced TPV, please include relevant info in a comment or send PG an email through the Contact page.

If you think PG might be failing to consider a theme-choice factor you believe is important, feel free to explain in the comments.

If there are any theme designers in the audience who feel one of their designs would work well, don’t hesitate to suggest your own.

After his experience with moving Mrs. PG’s author website to a new WP theme a few months ago, PG has decided that it’s a false economy to avoid paying a reasonable license fee for a theme and using a less-capable free theme instead.

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Strategies to cut overheads in a shrinking book business

31 July 2017

From veteran publishing consultant, Mike Shatzkin:

An inexorable reality of today’s commercial book publishing world is that it is shrinking.Although there have been no obvious signs yet that actual long-form book reading itself has declined (even though that would seem a likely consequence over time of the changed ways we get our reading inputs), the self-publishing and indie segment of the market keeps growing at the expense of the legacy commercial business.

Although it would take data I don’t have to prove this, it certainly appears anecdotally that the big houses are cutting back their investment in midlist titles, perhaps actually cutting future title count (which, over the years, has been an often-espoused but seldom-pursued strategy) but also offering smaller advances for all but the very top books.

Sales seem to be drifting away from the established publishers as their title outputs shrink or remain static and are shifting to Amazon’s own titles and indies, which is where the title base is expanding.

When businesses are shrinking, or even just not growing, it is a normal reaction to find ways to cut costs to maintain margins and profits. And, in fact, the big publishers have generally been managing their costs pretty effectively during a period of flat or declining top line sales.

In that context, it was no real surprise when it was publicly announced last week that F+W Publishing, which recently changed ownership, will cut overheads by moving from doing their own sales and distribution to working instead through Perseus, an Ingram company.

Meanwhile, the whole legacy industry worries about the future for Barnes & Noble.

Last week a significant Barnes & Noble shareholder called publicly for the chain to offer itself for sale, apparently calculating that new (and perhaps “private”) ownership would see paths to profits that aren’t being followed right now. This follows continuing evidence that B&N’s overall sales track the legacy business, and are therefore declining. Amazon, of course, is not just the principal creator and beneficiary of the new competitors, primarily independent authors. They are also moving from being an online-only retailer to competing in B&N’s milieu: physical locations offering books.

. . . .

Amazon’s supply chain, built on a scale that the book business alone could never support, is now the gold standard. It will enable them to continue rolling out smaller stores, which is the kind of outlet that can succeed in today’s book marketplace. The stark fact today is that more than half the sales are online (and despite BN.com and the increased frequency of online book peddling from authors and various vertical organizations enabled by Ingram’s Aer.io and its competitors, almost all of those go to Amazon).

Big in-store inventories have become a pointless anachronism.

It is cheap sport to ridicule Barnes & Noble’s performance in the Internet age. They’ve made many of the standard incumbent mistakes in the face of upstart competition. They dealt themselves out of the online business by not pursuing either of the two most likely paths to success. They should either have made their dot com a stand-alone business, with pricing and growth aspirations beyond books that competed with Amazon, or they should have tightly integrated the online and store offerings to produce a hybrid that had its own appeal. They did neither.

. . . .

The shrinkage of the commercial business has other visible impacts. There is anecdotal evidence that the agents are suffering from these cutbacks. One much-younger-than-I-am publishing veteran recalled for me that when he started agenting (he no longer is active in that aspect of the business) a dozen years ago, he could live on his salary as a fledgling agent and he could really “build a list”. Neither of these things seem to be possible anymore, or at the least they are much more difficult. Meanwhile, even the older agents — those who have a list of productive authors — are finding it get harder and harder to make sales. And like publishers of a certain age, these agents don’t find their own progeny or their younger staff as willing to commit money or time to the future of the business as they would have expected them to 10 or 20 years ago.

Present trends clearly suggest that we will continue to have fewer commercial publishers signing up fewer books for smaller advances outside the handful of authors that are virtual guarantees to deliver big unit sales. And for those books that do have an assured big unit sale, publishers will tend to be willing to overpay because they need throughput to feed their fixed-overhead machines.

Link to the rest at The Shatzkin Files

PG has disagreed with more than one of Mike’s posts in the past. In this instance, PG doesn’t disagree with the way Mike has characterized the current business climate for publishers. Mike has described the serious (likely fatal) problems of the traditional book business utilizing perspectives and information sources only a long-time publishing professional would understand.

However, as far as a solution for Barnes & Noble’s or the publishing industry’s overall problems, PG is reminded of an old business adage, “You can’t cut your way to success.”

Unless there is a reason to believe that a smaller book business will, by virtue of its size, gain access to powerful strategies, tools and talents that the larger one can’t obtain, cutting expenses is just trying to keep the Titanic afloat by tossing buckets of water overboard.

For authors, PG will repeat his harangue that the “standard” publishing contract that will last for the term of the author’s copyright – the remainder of the author’s life plus 70 years in the US and similar lengths of time in other countries – puts traditionally-published authors into a very difficult situation. They’re the only ones who can’t jump ship and take their sources of income with them.

Traditionally-published authors have signed a contract that ties up their books basically forever. The contract is with a publisher that is a corporate entity, not a person.

Although the publisher’s past record of selling books or an editor’s reputation for quality work developing other authors’ careers may have been a key element in deciding to place the author’s book with that particular publisher, the editor and the people who worked hard to establish a successful sales record are not parties to the contract. They have no obligations to the author or to the publisher. The publisher probably has no long-term obligations to the people who built the publisher’s reputation.

Cutting your way to success often means firing people with the highest salaries. Cutting your way to success can also mean ruthlessly pruning expenses so the corporation can be sold to an entirely new owner.

The author has no voice in choosing a new owner for the publisher and no ability to change the lifetime term of the publishing contract.

The new owner will undoubtedly be another corporation. That corporation may be operated by people who are experienced and skilled in the book business or the new owner may be a hedge fund that specializes in sucking the last dollar from distressed properties prior to placing them into bankruptcy where even lower bottom-feeders will pick over the bones of the once-successful publisher.

And the author continues to be an unwilling participant in the process by virtue of the lifetime plus 70 contract she signed.

Visitors to TPV can decide whether publishers operated by bottom-feeders will be conscientious about sending out timely and accurate royalty reports. And royalty checks.

If an author has an obligation to give the publisher first option on new books or is prohibited from writing books that will compete with those the publisher has already published, how likely is it that the bottom-feeder will promptly respond to the option manuscripts or agree that the new books are not competitive so the author can sell those books to another publisher or self-publish them? A bottom feeder might decide that the author should pay a fee to obtain clearance to take each new book elsewhere.

PG reflexively takes the author’s side in business transactions with others. As he has mentioned before, Mrs. PG is a long-time author, first traditionally published and, in recent years, very happily self-published.

He lays out these possibilities and probabilities not to ruin the day for a traditionally-published author, but as a warning to act like a business person who sees a big storm on the horizon and take whatever precautions are available to minimize the financial and emotional damage which is likely to occur based upon current trends in the book business.

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New owner of Garcia Street Books aims to offer what online sellers can’t: relationships

12 July 2017

From the Santa Fe New Mexican:

The new owner of Garcia Street Books is banking that an old formula, encouraging customers to browse, will help the independent bookstore survive in the age of Amazon’s Kindle and other online services that have eaten into the profit margins of brick-and-mortar booksellers across the nation.

Jean Devine, 63, said she wants the 15,000-square-foot building off Garcia Street and Acequia Madre to “open amazing places for the mind and spirit to go” while readers browse the eclectic selection at a store that’s managed to survive the introduction of chain-retailers such as Barnes & Noble in the 1990s and then the creative destruction the internet brought to the publishing industry.

Two weeks after purchasing the store from former co-owners Rick Palmer and Adam Gates, who had owned it since 2012, Devine said she has come to understand the loyal following Garcia Street Books has earned from customers over several decades. If the store does not have a certain book, regulars will eschew online ordering and keep her up to date about the books they want to purchase, she said.

“What keeps us alive are the people who live here, whether they’re full time or part time,” Devine said.

. . . .

The location, next to Downtown Subscription, has long been home to booksellers. A Canadian couple, Edward and Eva Borins, took ownership of the store in 2000 from Greg Ohlsen, now owner of the Travel Bug, who opened it about a decade before that.

Devine is optimistic about the viability of an independent bookstore in Santa Fe because of the creative people who live in the city. She said the pace of life is more deliberate and interactive than in larger cities where she’s lived, including St. Louis and Dallas, where the faster pace prompts more people to order online out of convenience.

. . . .

“One customer said, ‘When I come in the bookstore, it inspires me. …’ ” Devine said. “You don’t really have a relationship with an online ordering service.”

Link to the rest at the Santa Fe New Mexican

PG notes that the template for stories about an independent bookstore being sold to a new owner always includes a quote from a bookstore customer about how wonderful it is to hang around a bookstore and how much their little gray cells are stimulated by the experience.

And (the template continues) Amazon can never offer the customer the same wonder and stimulation that Jane’s Books or Joe’s Books or Jane and Joe’s Books can provide every single time a refined and sensitive soul wanders in the door to caress a few hardbacks.

PG finds this template particularly ironic following the conclusion of Prime Day, a major worldwide shopping event Amazon decided to invent three years ago. In July, when most retailers go to sleep.

The latest reports PG located when he posted this said Amazon expected Prime Day 2017 to be the biggest sales day in its history. If expectations are correct, that means Amazon just sold more stuff than it has on any Black Friday, Cyber Monday, three days before Christmas and December 26 in its history.

PG can relate to that sort of thing (and further stress his over-burdened credit card) far more than walking around a bookstore.

But, he probably is a more constrained spirit than the target customer for Jane’s Books.

Plus, PG already has a lot of very nice friends who never expect him to buy things from them.

 

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Bookselling in the Age of Amazon

26 June 2017

From Shelf Awareness:

“At the end of the day, bookshops needn’t fear Amazon,” James Daunt, managing director of Waterstones, said during a keynote speech last week at the Australian Booksellers Association’s annual conference in Melbourne.

. . . .

“If the bookshops are good enough, if the relationship with your customers is truly there, if your booksellers are enjoying themselves and you’ve trained them and you’ve respected them and you’ve allowed them to develop their skills… then our customers truly will remain loyal to us.”

. . . .

Starting when Amazon opened operations in the U.K. in 2000, the behemoth “slowly ate away at the High Street [downtown] market,” he said, and now has about 60% of the market, including 95% of the e-book market. The casualties have been extensive: most chains, including Borders, Ottakar’s, Dillons, Hammicks and James Thin, have disappeared. Indie bookstores declined from about 1,550 in 2005 to about 600 last year. Indies now account for about 5% of the market, and Waterstones about 16%. “Amazon virtually destroyed us,” Daunt said.

But “all is not doom and gloom,” he said. Amazon is known for doing a few things very well, particularly offering customers low prices on books and shipping quickly. As Daunt put it, Amazon is “alluring for one reason only: they’re cheaper.”

As a result, there is much that bricks-and-mortar stores do that Amazon can’t, from putting on events even “in the smallest of shops” to more generally “giving people a sense of excitement about books,” making books relevant, and keeping books “in the forefront.” He added, “We as booksellers have a duty to create excitement about books. If we do so, we’ll continue to have customers come through the doors.”

. . . .

In one of the most striking changes at Waterstones, the company reduced its return rate to 3% from 20%. In part this came about from better buying but also from forgoing substantial promotion co-op from publishers, to the tune of £27 million (around $35 million at current exchange rates). The “wholly destructive cycle” involved publishers “paying us to take particular books.” Besides abrogating buying decisions to publishers, the program also made Waterstones stores less distinctive from one another as well as from their competitors. The change, he added, was painful, like “coming off heroin,” but it had “massive benefits.” Besides improving returns, it “stopped us filling up our shops with books customers didn’t want to buy” and improved working capital by tying up less money. Eventually stock came down 20% and title count rose 20%. The company has also gone from two to five stock turns. He noted that with stock turns below five, “a lot of books are sitting there getting dusty, getting unattractive.”

Cost cutting included reducing head office costs by 60%, cutting costs in the centralized warehouse by 16%, and cutting store payroll by 16%.

. . . .

The emphasis on selling and being on the sales floor, also “brought energy into the shop. If you’re literally running around and don’t stop, customers feel that energy.”

Even though Waterstones staff has been cut, Daunt said he’s increased pay for the remaining employees. At Daunt Books, booksellers are paid a salary rather than by the hour. Waterstones pays by the hour but is starting to pay salaries. “We need to pay booksellers more and make it so people see this as a career,” he commented.

. . . .

When it named The Essex Serpent by Sarah Perry its Book of the Year for 2016, the title, which before then had sold under 1,000 copies, became a bestseller. Waterstones’ “books of the month” promotions have also increased sales “dramatically” for each title.

He noted that Amazon doesn’t have any impact on these titles, and called it an “urban myth” that people come into stores saying they can get titles at 50% off on Amazon. To the contrary, there is a sense, he said, that “a book bought from a bookshop is a better book…. When a book comes through a letter box or when a book is bought in a supermarket, it’s not vested with the authority and the excitement that comes from buying it in a bookshop.”

. . . .

“Price is irrelevant if the customer likes the shop,” he commented. “The book is never an expensive item,” particularly for the many customers who “we know are quite happy to go into a café and spend dramatically more on a cup of coffee.”

. . . .

The Waterstones website “doesn’t produce any sales for us,” accounting for less than 3% of the company’s revenue, Daunt said. But targeted e-mails lead to increased sales in shops, and social media is “an opportunity” for local bookshops to communicate with customers.

. . . .

Waterstones sells “a lot more things that aren’t books,” with children’s the most successful area, and has done so in “careful and measured ways,” so as not to “compromise ourselves as a bookshop.”

Link to the rest at Shelf Awareness 

While he read this, a phrase floated into PG’s mind from an unknown source, “the myths and fables we tell ourselves”.

Traditional Publishing Myth #1: Consumers don’t feel any emotional attachment with Amazon like they do with a local bookstore.

Does anyone who regularly purchases from Amazon not feel a little buzz when a package appears at their door? It’s an event which is followed by an unboxing experience. (If you don’t think unboxing is an experience search YouTube for unboxing. Millions of people watch videos of perfect strangers unboxing their Amazon purchases.)

In survey after survey, Amazon is ranked as one of the most admired and respected companies in the world, usually fighting with Apple for first place. PG has never seen Barnes & Noble or Waterstones on any of those lists.

Amazon has a superb reputation and that reputation carries over to all its product areas, including books. Amazon reviews, sales rankings, etc., are a gold standard for many book purchasers. PG doesn’t discount the existence of phony reviews, but he thinks most Amazon regulars aren’t fooled by such reviews, particularly when a book has dozens of reviews.

When it comes to spending his money PG would certainly give more credibility to a few dozen Amazon reviews about a book than he would to recommendations from a minimum-wage bookstore clerk who will soon be moving to McDonalds because the pay is better.

If a book doesn’t meet expectations, Amazon makes it simple to return it for a full refund. With an ebook, the return process is almost instantaneous.

Locating his receipt and trekking back to a bookstore to return a book is something PG is almost certainly never going to do. The book remains somewhere in Casa PG, reminding PG of his bad purchase choice whenever he sees it.

Traditional Publishing Myth #2: Ebooks are a fad and printed books are making a comeback.

Spare me.

Everybody carries a cell phone and almost everybody consults it on a regular basis. Sometimes, they look at illustrations and photos and cute puppy GIFS, but most of the time, they’re reading text. Actual text messages, email, the latest celebrity gossip, Facebook, The Wall Street Journal, Google search results, Wikipedia, etc., etc.

As of the second quarter of 2015, US consumers began spending more time in mobile apps than watching television (and that includes times when the TV is on in the background and no one is watching it). As TV viewing stagnates, the time spent with mobile apps has increased every quarter since then.

The idea that people who spend hours each day receiving information and entertainment from a screen will prefer switching to a printed book on a regular basis is delusional.

PG would probably be labeled as a frequent reader under most systems for categorizing readership. He reads from books every day. He has purchased hundreds and hundreds of physical books, many of which still populate his bookshelves. The same could be said for Mrs. PG.

PG is not a teenager and hasn’t been for some time. He remembers being a teenager, but suspects many of those memories have been smoothed and brightened during the intervening years.

But he’s on his fourth iPhone.

Over the last couple of years, PG has purchased some physical books, usually through Amazon and always when the title doesn’t offer an ebook version. He always regrets these purchases because they sit on a TBR pile that never grows smaller.

He starts to read each book, but when he puts it down, he never picks it back up again. It’s just not a satisfactory experience for him any more. He just won’t read any long-form text document unless it’s an ebook on his Kindle Paperwhite.

PG has run out of time before he has run out of Traditional Publishing Myths to debunk. Perhaps he’ll return to the topic in a future post, but don’t count on it. Feel free to add your own myths in the comments.

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Hoopla Digital and HarperCollins Disrupt Library E-Lending

25 June 2017

From Copyright and Technology:

An announcement this week by hoopla digital and HarperCollins augurs big changes in the ways that public libraries make e-books available. It sets the stage for realignment of the relationships between publishers and libraries, and it could have longer-term ripple effects on the entire e-book market.

For more than a decade, public libraries have been able to “lend” e-books using a certain model: the library “acquires” a title through an e-lending platform such as OverDrive; the library then has one “copy” that it can make available to patrons at a time. The platform sends each patron a DRM-protected file that allows reading for up to the library’s lending period. If one patron has the e-book “checked out” then another patron can’t read it until the period expires or the first patron “returns” it.

The library technologist Eric Hellman calls this model “Pretend It’s Print (PIP),” while the industry term is “one copy, one user.” PIP is an apt term because the library pays a fixed price for the title, just as it would do if it were acquiring a print book, and the publisher can account for it much as if it were a sale. If a library wants to enable more than one patron to read the title at a time, it has to “acquire” multiple “copies.”

. . . .

Hoopla digital, an OverDrive competitor, is a digital “lending” platform for libraries run by Midwest Tape, a leading supplier of library-ready physical media products (such as CDs, DVDs, and Blu-ray discs). It had been licensing digital audiobooks from HarperCollins since last year (as well as from many indie publishers). The new deal expands the relationship into e-books. HarperCollins will make over 15,000 titles available, though apparently not including frontlist titles.

What’s new here? Instead of libraries paying a fixed upfront price, as in the PIP model, they pay per “loan,” and there are no longer any limits on how many people can read an e-book at the same time. This is a boon to library patrons: it means that all titles can be available at any time, with no waiting lists. Otherwise the reader experience is much the same as with PIP, as is the technology used to deliver and display e-books.

The innovation is really on the financial and licensing side. At a basic level, this arrangement is risky for libraries. With the hoopla digital model, Libraries can’t budget for “acquisitions” as they have done with print books for centuries; instead they have to bear less predictable costs that rise and fall with demand for titles. At the same time, it enables libraries to license long-tail titles that they wouldn’t normally “acquire” because they don’t expect sufficient demand to make the one-time price worthwhile. That’s another benefit to users.

Publishers, meanwhile, get paid based on actual readership, not on a per-title basis. That’s good for them conceptually, because it makes libraries more like channel partners. So why are publishers slow to embrace this model — which hoopla digital has offered for e-books since 2014?

One reason is author contracts. Many author contracts don’t provide for handling royalties on much other than simple book purchases. From the perspectives of rights management and royalty processing, both e-book retail and PIP library e-book revenues can be treated similarly to print book sales. Things get difficult for publishers when they license into access models that fall short of purchases: sometimes they have to pay authors for each access as if it were a purchase, even if a user only reads a few pages, because the author contracts won’t allow otherwise.

. . . .

Trade book authors typically own copyrights in their works and only license publishers for specific purposes, such as print book sales; so publishers have little flexibility to enter into innovative license agreements without having to renegotiate author contracts. And renegotiating author contracts is, to put it mildly, not scalable.

. . . .

CPC is tantamount to an e-book rental model. (When I asked Eric Hellman for a name for this model along the lines of PIP, he replied “it’s just rental.”) Some early e-book services in the U.S. offered rentals, which were met with indignant backlash from people who insisted that “ownership” was the only acceptable model — never mind that whether you actually own a downloaded e-book is debatable — and that rentals were some sort of evil plot to deprive people of their rights (although e-book rental has been successful outside the U.S., such as in Japan and South Korea). Now libraries are eagerly embracing rentals, albeit ones users only pay for indirectly through taxes; Hoopla digital has already signed up public library systems in Boston, Philadelphia, Chicago, San Francisco, and Los Angeles.

Link to the rest at Copyright and Technology 

PG says this one more problem for traditional publishers who have used publishing contracts that provide for different (usually higher) royalties for the licensing of rights than they do for the sales of physical books or the “sales” of ebooks (which Amazon and others say are “licensed, not sold” to Amazon customers by publishers).

So far, most publishers have ignored this problem (by choosing the lower royalty rate for ebooks by pretending they are sold, of course) instead of facing it by amending their publishing contracts for ebooks to clarify royalties (and hopefully raise them for authors).

PG has written extensively about this problem, for example, here and here.

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Amazon Bites Off Even More Monopoly Power

21 June 2017

From The New York Times:

Amazon on Friday announced plans to acquire Whole Foods, the high-end grocer. If approved by antitrust enforcers, the $13.7 billion deal would give Amazon control of more than 400 stores, an extensive supply chain and a new source of consumer data.

Amazon will argue to federal authorities, most likely the Federal Trade Commission, that the deal should be blessed because the combined entity’s share of the American grocery market will be less than 5 percent.

But antitrust officials would be naïve to view this deal as simply about groceries. Buying Whole Foods will enable Amazon to leverage and amplify the extraordinary power it enjoys in online markets and delivery, making an even greater share of commerce part of its fief.

The company has established its level of dominance because of the failings of our current antitrust laws. To understand why, you first need to understand the scope of Amazon’s power. It has captured 43 percent of all internet retail sales in the United States, with half of all online shopping searches starting on Amazon. In 2016, it had over $63 billion in revenue from online sales in the United States — or more than the next 10 top online retailers combined. It controls 74 percent of e-book sales, is the largest seller of clothes online and is set to soon become the biggest apparel retailer in the country.

. . . .

 Think of Amazon as a 21st-century version of the 19th-century railroads that connected consumers and producers. Because of their gatekeeper role, railroads had power to discriminate, both among users and in favor of their own wares. These middlemen could tax the farmers and oil producers who depended on their rails — or deny them a ride and sink their livelihoods.

. . . .

In several key ways, Amazon uses its power as the railroads did. By integrating across business lines, Amazon now competes with the companies that rely on its platform. This decision to not only host and transport goods but to also directly make and sell them gives rise to a conflict of interest, positioning Amazon to give preferential treatment to itself.

The vast troves of information it collects enable it to self-deal with great finesse. News accounts tell how Amazon exploits data collected on the businesses using its platform to go head-to-head with them.

And like the railroads of yore, Amazon dictates terms and prices to those dependent on its rails. During negotiations with the publisher Hachette over e-book pricing, Amazon showed its might by effectively disabling sales of thousands of Hachette’s books overnight.

. . . .

Antitrust laws, which were passed by Congress to prevent these kinds of concentrations of private power, have been largely reduced to a technical tool to keep prices low. The change in thinking traces back to the Chicago School revolution of the 1970s, which ushered in decades of mergers and consolidation.

Embodying this “consumer welfare” regime, Amazon has largely avoided government scrutiny by devoting its business strategy and rhetoric to reducing prices. The company has marched toward monopoly by exploiting the defects of contemporary antitrust law.

Preventing Amazon from concentrating even more control will require that antitrust enforcers block the company’s bid for Whole Foods. But lawmakers and officials should go even further, embracing the original goals of antitrust law and adopting a competition policy fit for the digital age. Unless we recover our antimonopoly tradition, Amazon will centralize exceptional control.

Link to the rest at The New York Times

Somehow, PG has problems with the logistics of “embracing the original goals of antitrust law” while “adopting a competition policy fit for the digital age.”

Consider the dates the principal antitrust statutes came into being: the Interstate Commerce Act – 1887, the Sherman Act – 1890, the Clayton Act – 1914, the Federal Trade Commission Act – 1914, and a newcomer, the Robinson–Patman Act – 1936.

These laws were passed primarily to deal with market abuses by railroads and oil companies. The classic problem this legislation was designed to solve was a farmer in Iowa who, in the absence of any network of reasonable roads, had only one railroad available to ship corn to market. If the railroad raised shipping rates, the farmer had to pay those prices or not sell the corn.

So, Amazon is exactly like a railroad because, when you open your web browser, the only place where you can buy anything online is Amazon. Walmart is completely inaccessible. So is Google Shopping. And Apple? Forget about it. It’s absolutely impossible to buy anything from them. Ebay, Rakuten, JD.com? Not a chance. The internet train tracks don’t run there. How about Alibaba, whose 2016 profits were 55% greater than the combined profits of  Wal-Mart, Amazon and eBay. They can’t sell anything because Amazon.

The author of the OP is a “legal fellow” (is that sexist?) at “the Open Markets Program at New America.” From a quick visit to their website, the fellows appear to dedicate themselves to Amazon bashing.

And this “New America” organization?

New America was founded in 1999 to nurture a new generation of public intellectuals—scholars, policy experts, and journalists who could address major social, economic, and political challenges in ways that would engage the public at large—and to provide a set of blueprints for American renewal in an era of globalization and digitization. The initial challenge, which continues today, was to find the minds and foster the debates needed to guide American renewal in an era of profound, exhilarating, but often threatening change.

Further, “New America is a 501(c)(3) non-profit organization and all donations are tax deductible”, which means that, unlike Amazon, New American pays no income taxes and is excused from paying lots of other taxes as well.

But nurturing a new generation of public intellectuals doesn’t come cheap.

New American receives most of its funding from other organizations that also don’t pay any taxes. The minority of listed donors who do pay taxes includes Google, Walmart (plus the Walton Family Foundation), Netflix, Comcast, DISH Network Microsoft (plus the Bill and Melinda Gates Foundation) and Facebook.

If you identified any competitors of Amazon among New America’s donors, you would be correct.

By mere coincidence, neither Amazon nor Jeff Bezos are listed as donors. Perhaps if Jeff wrote a check, New America would discover that Amazon’s business practices fit perfectly into “a competition policy fit for the digital age.”

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Update

8 June 2017

PG usually doesn’t share much in the way of personal information on TPV, but felt it might be beneficial to some visitors if he shared a few of the recent experiences he and Mrs. PG had experienced along with some lessons he learned.

About 2:30 AM on April 29,2017, two police officers knocked on the door of our home. They brought news that our 32-year-old son had committed suicide.

Our son had experienced mental illness, at first diagnosed as depression and later bipolar disorder, for about twenty years. Suicidal thoughts were part of his illness from the time he was twelve. He was extraordinarily intelligent and achieved some amazing accomplishments, but his illness seemed to intrude whenever things were looking the brightest for him.

Since that early morning visit, PG has learned that grieving has a physical as well as an emotional impact on him. Physically, he’s been getting sick with every virus or bacterium that comes around and feeling chronically exhausted. Generally speaking, PG is a bounce-back-from-problems kind of guy, but there was no bounce for several days. He is definitely improving, as is Mrs. PG, but still has a distance to go.

Two weeks after our son’s death, PG’s younger brother died in a distant state following an eight-month battle with brain cancer. PG made travel arrangements, but decided he just couldn’t make the trip at that particular time, something that’s never happened to him before.

A few lessons PG has learned:

– PG’s personal religious beliefs and Mrs. PG’s similar beliefs have been extraordinarily important to both of us during these experiences.

– Few people know what to say after a death, particularly a suicide, but saying exactly the right thing doesn’t matter as much as PG had previously believed.

– The support of others, expressed during visits and phone calls or via email, condolence cards or flowers, has been very important for both of us. The ability to articulate detailed comforting thoughts or theology is less important than simply letting someone know you’re sorry they’ve had a death in their family or among their friends and offering to help them in any way you can.

– PG is never going to decide he doesn’t know an acquaintance or friend well enough to avoid some sort of an engagement with that person after a death in their family. The kindness of others, expressed in any manner, is enormously important to the surviving family and friends.

– A great many decisions must be made quickly following the death of a family member – funeral arrangements (casket selection, services the funeral home will provide, embalming or not, etc., etc.), funeral service arrangements, selection of a burial location, notification of the date and location of the funeral communicated to family members and friends, etc. PG hadn’t gone through this process before and was not in the best condition to make such decisions in a hurry. A neighbor who had worked in a funeral home on a part-time basis while he was in college provided important counsel that made the process easier.

– PG and Mrs. PG have decided they will make each of these choices for themselves ahead of time, including selecting a funeral director, casket, gravesite, paying for it all, etc., so their family members won’t have to deal with this upon their deaths. Many of these decisions will affect the cost of these services and, PG believes, are better made before the emotions are at their height.

– PG forgot to notify a couple of relatives who should have received notifications in time to attend the funeral, so he’s putting together an email/phone list for future use.

– PG’s surviving son is handling the property, debts, etc., of his deceased brother with the assistance of a competent probate attorney. This is his way of serving his deceased brother and PG is extremely grateful for that assistance.

– Basically, once a probate case is opened with the appropriate court, you instruct all creditors to file their claims in probate court. Final tax returns will need to be filed. A leased vehicle is involved, so you tell the leasing company where the car is located so they can pick it up.

– You don’t want to start dividing property among the survivors until the creditors have filed their claims and you know whether the estate will have enough cash to pay all debts. It will take time, often several months, but the process is one that probate courts and probate attorneys do all the time so no one has to invent anything new.

– PG had forgotten that thieves sometimes visit the homes of surviving family members during the funeral, so he appreciated the offer of a neighbor to house-sit Casa PG while PG was attending the funeral.

– Some people don’t understand how mental illness can be a deadly disease. While most people don’t die from mental illness, unfortunately, suicide is the way mental illness usually claims its victims.

– While the various treatments PG’s son underwent ultimately were not effective in saving his life, the treatment of mental illness has improved immensely over the many years PG has dealt with the disease in his family. Many people who might have died twenty-five years ago are alive and well today because they received proper treatment. If you wish to support further research into more and better treatments for these diseases, the National Alliance on Mental Illness (NAMI) is one organization that does very good work.

Being the recipient of the many and varied kindnesses of others during the most difficult time of his life has made a deep and lasting impression upon PG. He will never see or speak with those people again without remembering what they did to help him during this time.

 

 

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Principles of Pricing: An Analytical Approach

6 June 2017

This post requires a bit of background.

As all educated persons know, The Chicago Cubs baseball team won the 2016 World Series after a gap of 108 years following its prior world series victory in 1908. The Cubs also won the 1907 world series, something gainsayers of the historic quality of Cubs baseball sometimes forget.

During the last stages of the 2016 pennant race, Mrs. PG was consumed by Cubs baseball and drew PG into her obsession as well. Prior to their marriage, Mrs. PG lived in a high-rise Chicago apartment that looked directly down into Wrigley Field and the premarital PG’s attended some enjoyable baseball games there.

This was during the days that Cubs owner, P.K. Wrigley, still controlled the team. P.K. had an unshakable conviction that baseball was never meant to be played at night, under artificial lights (ugh!). So there were, in that bygone age, no lights in Wrigley Field and all games were played during the lovely afternoons Chicago invariably offers during baseball season. PG slipped out of his employer’s premises on more than one occasion to attend a weekday Cubs game.

All this background is necessary to establish the Cubs bona fides as a legitimate source for citations in scholarly works.

During his wanderings around the internet, PG discovered Principles of Pricing: An Analytical Approach by Rakesh V. Vohra and Lakshman Krishnamurthi. Professor Krishnamurthi currently teaches at the business school at Northwestern University, a short ride from Wrigley Field on the Chicago L (elevated train), a storied public transit system (using the term, “system,” in its loosest sense). Professor Vohra formerly taught at Northwestern.

In this worthy tome, the authors were inspired to include a reference to Cubs baseball and some of its ticket pricing history. If you look at the second full paragraph in the Google Books excerpt below, you will see a description of one of the ways the Cubs tried to sell tickets during their 108-year dry spell.

However, the most important element of this analysis is found in footnote 16 on the same page. Footnote 16 provides definitive scholarly support for the theory that the billygoat curse was the principal reason for the Cubs’ long world series drought. Perceptive readers will remember PG’s treatises on the billygoat curse last fall here and here.

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Following the Cubs’ inspiring march into baseball history last season, Mrs. PG decided she needed a subscription to MLB.com, Major League Baseball’s streaming television service so she could watch all the Cubs games. So far, she’s only missed a couple of games.

For over a century, Cubs fans ended each season with, “There’s always next year.” While Mrs. PG isn’t entirely satisfied with some of the play this season, the PG’s are confident that last year’s triumph is only the first of many for the team formerly known as the Lovable Losers.

Following is the song that’s sung by Chicago fans after each Cubs victory in Wrigley Field.

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