e-Reader Price War

Since I was offline last week without my modem, I missed talking about the e-reader price war. Thought I'd get caught up today.

Last Monday, without warning, Barnes & Noble lowered the price of its Nook reader from $259 to $199 and announced their Wi-Fi only version would sell for $149. A few hours later, Amazon cut the price of the Kindle to $189.

The Motley Fool pointed out something interesting:

The price war must have taken Amazon by surprise. I had to chuckle at Target's circular over the weekend, pitching $259 Kindle readers six days after Amazon's knee-jerk reaction. Clearly, the price cut wasn't orchestrated or rehearsed -- it was pure desperation.

If you'll recall, when the Kindle was originally released on November 19, 2007, its price was $399. Then on February 10, 2009, Amazon released the Kindle 2 with improved features, priced at $359. Five months later on July 8, Amazon reduced the price of the Kindle 2 to $299. Three months after that on October 7, the price dropped to $259. This latest price drop to $189 represents a 47% drop from the original $399 retail price tag.

Last month, I said that, on the surface, Amazon's strategy of selling e-books at a loss made no sense. But that strategy benefited sales of the Kindle. Serious readers were willing to fork over $259 for an e-reading device when they knew they could buy books for it at $9.99 each. Buy enough books and the Kindle paid for itself. That strategy also made Amazon the largest e-book retailer in the United States.

Now Amazon has been forced to agree to the agency model for e-book pricing. And B&N lowered the price of the Nook. Things are probably a little tense around Amazon these days.

Interestingly enough, yesterday Forbes published an interview with Jeff Bezos. The interview took place last Tuesday, the day after the price war started.

Bezos brushed off iPad comparisons to the Kindle by saying, "It's really a different product category. The Kindle is for readers."

The most interesting part of the interview took place when Forbes asked about e-book pricing and whether the agency model would hurt Amazon. Bezos replied:

No. First of all, there are a bunch of publishers of all sizes, and they don't all have one opinion. There are as many opinions about what the right thing to do is as there are publishers. So you're seeing that some of them are being very aggressive on prices, pricing their books well below $9.99.

Others are trying to do everything they can to make prices as high as possible. And what you're going to see is a share shift from one group of publishers to this other group of publishers ... It's a significant shift and we're seeing it already.

Interesting days ahead ...

What Does the Viacom Decision Mean to Writers?

Yesterday I answered the first question Tara asked about the Viacom v. YouTube & Google court decision handed down last week. Today, we'll address Tara's second question: Do you think this will affect authors?

The New York Times had an article on Friday here titled "Roll-Up Computers and Their Kin." The story focused on the digital future of books. Nicholas Negroponte, Chairman and Founder of the One Laptop Per Child Foundation (OLPC), is quoted as saying, “The paper book is dead.”

Mr. Negroponte is doing God's work by developing inexpensive, durable computers for children in third world countries. According to his bio on the OLPC site:

He is currently on leave from MIT, where he was co-founder and director of the MIT Media Laboratory, and the Jerome B. Wiesner Professor of Media Technology.

Mr. Negroponte's entire life is digital media. He was even an early investor in Wired Magazine. We can excuse him for believing that the rest of the world is at the same place and time that he is vis-a-vis digital technology. As far as he's concerned, paper books are dead.

I don't think he's right though ... at least not in our lifetimes. I do think that by the time our great grandchildren are able to read,
p-books will be collectibles, to be treasured and handled carefully and then put back on the shelf so the acids from our fingers don't damage the pages. By then, reading will be completely digital.

And that leads me to the crux of Tara's question. Does the Viacom decision affect authors? Viacom certainly thinks so. Remember how they described their case against YouTube:

YouTube has harnessed technology to willfully infringe copyrights on a huge scale, depriving writers, composers and performers of the rewards they are owed for effort and innovation, reducing the incentives of America's creative industries, and profiting from the illegal conduct of others as well. Using the leverage of the Internet, YouTube appropriates the value of creative content on a massive scale for YouTube's benefit without payment or license.

I think Viacom is stuck in the same rut as the Big Six publishing houses. They are so focused on looking backward over their shoulders at what used to be that they've forgotten to watch the road ahead.

Our technology is moving forward at breakneck speed, but our copyright laws have stagnated. We need to stop and take some time to realign the law with the technology. Instead of facing the future with fear and anger, we need to recognize that the key to our success as writers in that future is our readers. Aggravating those reader/customers with DRM locks, video take-down notices, and artificial pricing for e-books is not the answer.

I'm not a particular fan of Jeff Bezos, the founder of Amazon. I acknowledge his genius without admiring his take-no-prisoners approach to negotiating. However, his single-minded focus on customer satisfaction is the reason Amazon became the mega-corporation it is today. We writers could do worse than to take a lesson on reader satisfaction from Bezos and his company.

Nearly three years ago, I did two posts on the need for copyright reform. I've done lots of posts since then on the subject, but I think it's worthwhile today to revisit those early ones. Go here and here to read the two posts that were published on subsequent days in 2007. Those posts include very specific suggestions as to how to reform our laws.

Instead of buying into the paranoia surrounding copyright, I believe authors need to keep their focus on the reader and on what makes sense as far as guaranteeing that reader's satisfaction. That means authors should lead the demand for substantive copyright law reform.

I hope this answers your questions, Tara. If not, feel free to bring up additional quesions. I'd like to hear what others think on this subject, too.

Follow-Up to the Viacom v. YouTube Decision

On Friday, I did a post on the Viacom v. YouTube & Google case. A federal judge ruled in favor of YouTube last Wednesday. Tara asked two questions: (1) Do you think the decision went the right way? and (2) Do you think this will affect authors?

Let me take the second question first today. We'll do the first question tomorrow.

Yes, Tara, I do believe the decision went the right way.

Regular readers of this blog know that I keep castigating the Big Six New York houses for not be willing to adapt quickly enough to the changing landscape of the publishing industry.

I happened to see a rerun of the 1993 film Jurassic Park on network television recently. In that movie Jeff Goldblum, playing scientist Ian Malcolm, says something like this: "If there is one thing the history of evolution has taught us, it's that life will not be contained. Life breaks free, expands to new territory, and crashes through barriers ..."

I would argue that the same thing can be said of technological progress. In its lawsuit, Viacom tried to make the case that YouTube was created for the express purpose of violating copyright.

Even if that's true, it no longer matters. Three months ago, the web traffic monitor Alexa estimated that YouTube is the third most visited website on the Internet, after Google and Facebook.

Does Viacom seriously think they can contain THAT kind of energy?? And even if they could, another hundred websites doing the exact same thing would immediately spring up to replace YouTube. Watching video clips is now a part of the Internet user psyche. Hell, one of our favorite things to do every Saturday morning is to go to the Purina Animal All Stars website here and spend 30 minutes giggling over stupid pet videos.

And, yes, I do recognize the difference between a homemade pet video and a clip from Iron Man, but my point is that Internet users and cell phone users and iPad users are now accustomed to uploading and downloading content. I'd argue that, instead of suing YouTube, Viacom needs to figure out how to make YouTube work for them.

What do I mean by making YouTube work for them? I just checked YouTube (which I have bookmarked on my laptop) to see what I'd get if I searched for Twilight Eclipse. I found both of the official movie trailers. One has had over 8 million hits and the second had over 6 million hits. You can't beat that for pre-release publicity.

The Digital Millennium Copyright Act (DMCA) was signed into law on October 28, 1998, for the express purpose of addressing online copyright infringement. It promises a "safe harbor" to Internet service providers who act promptly to remove content once they receive a notice of infringement from the copyright holder or his representative.

Viacom tried to trip YouTube up by submitting 100,000 such take-down notices on one day--February 2, 2007. YouTube responded by removing almost all of the offending videos within 24 hours.

Viacom then tried to argue that YouTube should be able to recognize infringing content and take it down without receiving such a notice. YouTube responded that they have no way to know that the video wasn't posted by the copyright holder or his representative unless informed to that effect. The judge agreed.

My message to Viacom is: Get real, guys. Work with YouTube/Google just like CBS, Lionsgate, Sony Pictures, Metro-Goldwyn-Mayer, and the BBC are already doing. Figure out how to monetize YouTube to your advantage.

And quit wasting money on lawyers and court fees trying to stop the tide from coming in.

Viacom v. Google

My new modem arrived and is now installed so I'm back in business. Sorry for the disruption.

On Wednesday, U.S. District Court Judge Louis Stanton ruled on the Viacom v. YouTube & Google copyright infringement case. To the surprise of many, the judge ruled in favor of Google and YouTube.

Let's talk about the case. Viacom, which owns Paramount Pictures, MTV Films and Nickelodeon Movies, sued YouTube (and its parent company Google) in March, 2007, claiming:

YouTube has harnessed technology to willfully infringe copyrights on a huge scale, depriving writers, composers and performers of the rewards they are owed for effort and innovation, reducing the incentives of America's creative industries, and profiting from the illegal conduct of others as well. Using the leverage of the Internet, YouTube appropriates the value of creative content on a massive scale for YouTube's benefit without payment or license.

Google bought YouTube in 2006 and immediately set about negotiating deals with the entertainment companies whose material kept appearing on YouTube as content. I reported on their progress, as well as the difficulties they were having in negotiating with Viacom in a post in May, 2007 here:

In early February, talks broke down between Google, YouTube and Viacom. Six weeks later, on March 13th, Viacom sued both YouTube and Google in New York's U.S. District Court for more than $1 billion dollars, citing widespread copyright infringement.

CNET News quoted a legal expert in a March 13, 2007 story here:

"Although legitimate copyright concerns come into play, Viacom's action is 'probably about a large company that would prefer the old status quo, where they had most of the control (over their content distribution), and they didn't cede it to companies like YouTube and Google,' said Jeffrey Lindgren, an intellectual-property lawyer at Morgan Miller Blair in San Francisco."

In my blog post I mentioned earlier, I quoted an article in Tech News World:

"Google claimed that Viacom's allegations of copyright infringement were without merit because You Tube is protected by one or more of the DMCA Safe Harbor provisions."

The Digital Millennium Copyright Act (DMCA) was signed into law on October 28, 1998. It provides "safe harbor" for online service providers, including ISPs, against copyright liability if they block access or remove copyright-infringing material once they are notified of a copyright infringement claim.

Viacom responded that YouTube didn't qualify for safe harbor protection. They claimed that YouTube was set up to profit from copyright infringement. Here is another quote from their filing:

YouTube deliberately built up a library of infringing works to draw traffic to the YouTube site, enabling it to gain a commanding market share, earn significant revenues, and increase its enterprise value.

On March 19, 2010, three months before Judge Stanton ruled, CNET posted a great article titled "Reasons to Care About Viacom v. Google (FAQ)." Here is an excerpt:

Sharing music and video on the Internet was once a free-for-all, but a decision against Google and YouTube is a sign that the taming of the Web is under way ... If Google is held responsible for taking down content before receiving a notification from a copyright owner ... [t]hey would have to review everything that people attempted to post before it was published, sending costs skyrocketing and clogging the content pipeline. It would virtually paralyze them.

Go here to read the entire CNET article.

Apparently Judge Stanton agreed with Google's reasoning. He didn't even let the case go to trial. Instead, he granted Google's request for a summary judgment. Yesterday's Publishers Weekly reported:

In strong language, the court found that YouTube does qualify for protection from the potentially infringing acts of users under the safe harbor provision of the Digital Millennium Copyright Act (DMCA). And, in something of a rebuke to Viacom, the court actually praised Google for its handling of infringement complaints.

Here's an excerpt from the judge's decision:

Indeed, the present case shows that the DMCA notification regime works efficiently: when Viacom over a period of months accumulated some 100,000 videos and then sent one mass take-down notice on February 2, 2007, by the next business day YouTube had removed virtually all of them.

By promptly removing the copyrighted content after receiving a take-down notice, YouTube afforded itself protection under the safe harbor provision of the DMCA.

On the Official Google Blog here, Kent Walker, Google's Vice President and General Counsel, had this to say about the decision:

This is an important victory not just for us, but also for the billions of people around the world who use the web to communicate and share experiences with each other.

Obviously Viacom feels differently and has already started the appeal process. Michael Fricklas, Viacom's Executive Vice President and General Counsel, issued a statement here that said:

We are disappointed with the judge's ruling, but confident we will win on appeal.

Copyright protection is essential to the survival of creative industries. It is and should be illegal for companies to build their businesses with creative material they have stolen from others ...

This case has always been about whether intentional theft of copyrighted works is permitted under existing law and we always knew that the critical underlying issue would need to be addressed by courts at the appellate levels. Today's decision accelerates our opportunity to do so.

Taking a Break

I'm posting this from my office.

My modem at home died a horrendous death last night. AT&T says I can buy a new one for $87.50 from Best Buy, or they will ship me a new one for free, but it will take "three business days" to arrive.

I opted for the free modem.

I'm going to take a break from blogging until the modem arrives later in the week.

Hopefully I'll be back in business by Friday.

Take care.

The Writer's Dilemma

I talked yesterday with a newbie writer who'd contacted me for advice. She's been in query letter hell for the last year and was looking for a fresh perspective. I agreed to read her query letter and first chapter.

There was good news and bad news.

The good news is that she is a very competent writer. Her use of language and imagery were terrific. The chapter I read was clean and polished: she got right into the story without any backstory to slow down the action, and there were no grammatical errors. Her query letter was short and business-like with a brief synopsis.

She'd written a fantasy novel about a small group of vampires who protected the world from evil members of their kind who preyed on humans. Her hero was a brooding loner tired of his long life who unexpectedly found love with a spunky young woman he'd saved from an attack.

During our phone call, I told her all the good things I'd seen about the letter and her chapter. She wailed, "Then why aren't any agents interested in me? I researched carefully and only sent letters to agents who represent novels like mine."

I'd already asked whether she's getting form letters or personal responses from the agents she'd queried. Well over half the letters she is receiving are personal letters or form letters with personal notes added to them.

I said, "Let me take a stab at what they're saying. Things like, 'You write well, but this just didn't grab me.' Or 'This isn't what I'm looking for at this time'."

She practically jumped through the phone at me. "That's it. Exactly!"

I gave her the bad news. Her novel premise was derivative. Every agent she'd queried had seen it all before ... done by writers they already represented. There was nothing new or exciting about her manuscript.

She asked, "Isn't there anyone who'd be interested in my story?"

I said, "Sure, you could probably sell it to an online publisher. Releasing it as an e-book doesn't represent a huge risk to them so it would be easier to find a publisher that way. However, agents only eat when they can make a kill. A story everyone has seen before--and which their own clients have already written--won't excite them very much."

We continued to talk. She loves to read paranormal and wants to write what she reads. I began probing. Her interest in para-
normals started with her African-American grandmother who used to tell her voodoo stories.

I said, "Why not write a different kind of paranormal? Think about writing a voodoo story."

"I wouldn't know how to begin."

"How did you begin the novel you sent me?" I asked.

"That was easy. I knew how to write about vampires."

She couldn't see my grin over the phone. "Yeah, because you were following the template dozens of other writers established long before you arrived. Create your own template. Make readers want to know what happens next because you aren't writing a formulaic story."

My new friend faces the classic writer's dilemma. You know what's popular and what's selling today. You want to jump on the bandwagon. But you have to earn your own place in that parade. You can't just grab onto another writer's coattails.

Write what you love. Just make certain it's YOUR story you're telling.

One Last Time

I think this will probably be my last post on The Authors Guild v. Wiley. The Guild won. Any postings after this would likely be excess icing on the celebratory cake.

Yesterday, The Authors Guild [TAG] responded to Wiley's press release:

From the start, informed consent has been our primary concern regarding Wiley's proposed amendments to the Bloomberg authors' contracts ...

Wiley's press release here indicated the Guild had suggested that, at the close of a royalty period under the new terms, an auditor should review and report on the results. Wiley rejected this suggestion for their more "timely" decision to contact each of the Bloomberg authors now to discuss the proposed new terms.

TAG also wanted "Wiley [to] voluntarily agree to industry-standard reversion of rights sales thresholds for its Bloomberg authors." I mentioned this in a previous post. Throughout the industry, most print contracts establish a minimum sales threshold that a publisher must reach in order to retain rights to an author's work. If the publisher fails to reach that minimum number of sales, the author may request in writing that the right revert back to him/her.

Wiley trumpeted their new print-on-demand technology for Bloomberg authors as a way "to keep our authors' works in print when it is no longer feasible to maintain inventory ... [r]ather than putting our books out of print ...."

The Guild pointed out "if their books didn't sell enough to justify replenishing stock with a traditional print run, then the rights in the books [should] be revertible."

Wiley did not address this issue in their press release.

The Authors Guild then offers something to the Bloomberg authors, which I believe is exactly the sort of thing that a writers' trade organization should do:

Informed consent/informed rejection can still be yours! ... We'll be offering a free service to all Bloomberg authors that will provide you with a side-by-side comparison of your original Bloomberg contract and Wiley's proposed amendments.

I may just have to apply for membership in The Authors Guild ... in solidarity.

Go here to read their entire post from yesterday.

Update On Authors Guild v. Wiley & Sons

I'm just going to post yesterday's press release from Wiley, which I think says it all:

Over the past week, a public dialogue has ensued about Wiley's communications with the group of 117 authors joining us from Bloomberg. After a useful and productive exchange of ideas, we concluded that the best way to proceed is to call each and every one of these authors to make sure they understand the changes that we have proposed. If any of them are uncomfortable with our proposed changes, they can choose to retain their original Bloomberg contracts.

The Authors Guild recently proposed to Wiley that we wait until the next royalty period to complete a sample comparison of royalty payments to authors under the Wiley proposal and the existing Bloomberg contract. While we recognize the intent of their proposal, we believe our approach is more timely and in the best interests of our authors.

Wiley shares a common objective with the Authors Guild, to treat authors well and fairly. Our Company is well known for excellent relationships with our authors-—a reputation we have earned and will work hard to retain.

As I said yesterday, "You rock, Authors Guild!"

The Authors Guild 2; Wiley 0

Most Americans are familiar with the name of Michael Bloombergy, the Mayor of New York City and the 23rd richest person in the world (according to the March, 2010 Forbes).

Fewer people know that Bloomberg built his fortune with a $10 million severance check he received after being fired in 1981 from Salomon Brothers, the Wall Street investment firm. Bloomberg used that $10 million plus a large investment from Merrill Lynch and some other partners to build the firm he later named Bloomberg L.P.

Bloomberg L.P. is a financial software, data and news corporation.

Why am I telling you all this? Because earlier this year, Bloomberg L.P. and John Wiley & Sons announced a joint venture. Wiley is an academic/educational publisher founded in 1807 and located in New Jersey. The two companies agreed that Wiley would take over the Bloomberg Press imprint (founded in 1996).

The Wiley March 12th press release read:

With Wiley as the new global publisher and distributor of BLOOMBERG PRESS titles, Bloomberg and Wiley will leverage the core strengths of the BLOOMBERG PRESS imprint and bring an unparalleled selection of titles for business leaders, finance and market professionals and academia ....

”This is a powerful alliance that leverages Wiley’s vast experience in publishing business and finance books. The relationship takes advantage of our strength in sales, publicity and marketing, and combines with the power of the Bloomberg brand in a way that will maximize exposure for the authors and content globally,” said Stephen Kippur [EVP of Wiley].

So here's Wiley with its shiny new toy. And what did they do? They proceeded to piss off The Authors Guild [TAG].

Regular readers of this blog know that I haven't always been whelmed by The Authors Guild--never mind OVER-whelmed. However, things over there have markedly improved in the last year or so. And then two months ago, Scott Turow became the new president. So I've been holding my breath to see what the new regime would mean.

The draperies had barely been hung in Mr. Turow's new TAG office when he and his team went after Wiley.

Last Thursday, Galleycat reported here:

The Authors Guild is urging Bloomberg Press writers to reconsider signing a letter from John Wiley & Sons ... the company has sent a letter [dated April 29] to hundreds of Bloomberg writers "about a few differences in the accounting systems of Bloomberg and Wiley."

In a June 10th posting on the Advocacy section of their website here, The Authors Guild says:

If signed by an author, the letter is actually a contract amendment that will materially and adversely affect the royalty rates of many Bloomberg Press authors.

TAG had two specific complaints with respect to the Wiley letter (duplicated here). First, the Wiley letter cheerily informs Bloomberg authors that henceforth the company will be paying royalties based on net receipts instead of based on the retail list price.

Let's think about that for a moment. As an example, would you rather have 15% of the $28 list price of a book or 15% of the ... let's say ... $14 net receipt?

Gosh, let me think about that for a minute or two.

In addition, Wiley proudly announces its print-on-demand program and generously offers to pay authors 5% of net receipts of any book sold in this way. And, no, that's not a typo. I did say 5%.

Let's ignore for a minute the piddly 5% royalty they're offering. Many authors' contracts specify the minimum number of books a publisher must sell each year in order to continue to hold rights to the work. Wiley's contract amendment letter does not set such a minimum threshold. The Authors Guild worries that this would grant Wiley "a perpetual right" to authors' works.

TAG ends their posting this way:

This is no way to do business. The letter is shocking from a publisher of Wiley's stature. In our view, Wiley should tear up any signed letters it has received and start over, forthrightly explaining to its new authors the contractual changes it is seeking and how this may affect their income and their right to terminate their publishing contracts.

I finished reading the post yelling, "You rock, Authors Guild!"

Wiley was quick to respond on Thursday with a brief press release here, which said in part:

This morning – without speaking with Wiley concerning its specific assertions – the Authors Guild issued an “alert” to its authors, claiming that the Wiley letter is deceptive and inferring that the Wiley changes it effects will reduce royalties for all or most former Bloomberg authors. This is simply not the case. We believe former Bloomberg authors will be paid higher royalties in most instances.

Hmmmm. They must be talking about ANOTHER letter they sent to their authors because the one to which I linked above ain't that one.

The Authors Guild posted the Wiley press release on their site on Friday and responded here. Beyond pointing out that TAG says they emailed Wiley on May 7 with their concerns, I'll let you read the post in its entirety.

Hey, Bloomberg L.P.!!! Is this what you had in mind when you handed your book imprint over to Wiley??? You might want to give your new partners a call. Not only was that April letter a sleazy ploy, the June 10 response was UN-responsive.

Take a clue from BP's mistakes, Wiley. Act sooner rather than later. Show some sincerity and quit trying to defend yourself. Apologize and take action to make things right.

Wayne Dyer Sued for Copyright Infringement

Wayne Dyer, the well-known author of the self-help book Your Erroneous Zones, is being sued for plagiarism by another author according to The Hollywood Reporter's THR, Esq. column.

I checked RFC (Recently Filed Cases) Express and found that Stephen Mitchell v. Wayne Dyer, P.H.D et al was filed on Monday, May 24 in California Central District Court. The "et al" in the defendant description includes Hay House, a publisher that specializes in New Age and self-help books.

According to THR, Esq., The basis of the lawsuit is Stephen Mitchell's claim that Dyer "'copied verbatim a significant portion' of his interpretation of the ancient Taoist scripture Tao Te Ching in two separate books."

The books in question are Dyer's p-books and e-books titled Living the Wisdom of the Tao and Change Your Thoughts--Change Your Life.

Mitchell is a well known translator and interpreter of ancient texts, most notably the Chinese Tao Te Ching. According to Wikipedia:

The Tao Te Ching has been translated into Western languages over 250 times ... According to Holmes Welch, "It is a famous puzzle which everyone would like to feel he had solved."

Many translations are written by people with a foundation in Chinese language and philosophy who are trying to render the original meaning of the text as faithfully as possible into English. Some of the more popular translations are written from a less scholarly perspective, giving an individual author's interpretation. Critics of these versions, such as Taoism scholar Eugene Eoyang, claim that translators like Stephen Mitchell produce readings of the Tao Te Ching that deviate from the text and are incompatible with the history of Chinese thought.

Of course, the key point here is that Mitchell's translation represents his unique interpretation of the Tao Te Ching. If Dyer copied Mitchell's text verbatim, he is probably going to have some difficulty in a copyright infringement case.

Writers are familiar with the U.S. Copyright law's Fair Use test. The test has four factors which determine whether the use of another artist's work qualifies as fair use. Those four factors are:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.

Under the second factor above, if the artist creating a derivative work "transforms" the original work into something new and different, he has a better chance of winning a fair use case.

Go here to read The Hollywood Reporter's article.

Stay tuned ...

iRex Files Bankruptcy

On Wednesday, SlashGear reported that iRex Technologies filed for bankruptcy on Tuesday in the Netherlands.

I first mentioned iRex on this blog here on 1/5/06, reporting that the company was scheduled to launch an e-book device called the iLiad in April, 2006.

About six months later, on 7/24/06, I said here:

... the iRex [device] was scheduled to be released on July 11th. I was shocked to see the advertised price of the iLiad was $811 ... I [don't] picture them selling many of those babies.

Three days later, while wondering why the iLiad could be so expensive, I described the specifications of the device here.

On May 8, 2008, I reported here that the price of the iLiad had come down to *only* $699. I also cited an article in The Bookseller:

Borders is to become the first seller of e-book readers in the United Kingdom with seven stores stocking the iLiad reader from Saturday.

On 9/3/08, iRex distributed a press release that said:

Gill & Macmillan, the leading Irish book publisher, today launched a pilot scheme that will take some weight off the shoulders of the first-year pupils of Caritas College, Ballyfermot . . . St. Brendan’s class, a group of 18 first year students at the all-girl school . . . will become the first class of students worldwide to replace their academic load with the iLiad, an electronic book device.

On 9/11/08, BusinessWeek reported on an experiment that took place in France with a prototype digital device from iRex called the Read & Go:

The trial of the prototype will wrap up this month, and by 2009, France Telecom (FTE) aims to start distributing the Read & Go in conjunction with a subscription-based news service of the same name. For a monthly charge similar to a mobile service plan, customers will receive an over-the-air stream of aggregated content from a wide assortment of information sources. Alongside the articles will be ads that help defray the cost of the service.

I described iRex's devices for the business market:

iRex has unveiled its Digital Reader 1000 with a 10.2 inch screen and a price of $649; a reader/writer is $749. And "the big daddy 1000SW -- with WiFi, Bluetooth and 3G data connectivity" is priced at $849.

Last fall, on 9/22/09, The New York Times reported here:

... iRex Technologies, a spinoff of Royal Philips Electronics that already makes one of Europe’s best-known e-readers, plans to announce that it is entering the United States market with a $399 touch-screen e-reader.

Owners of the new iRex DR800SG will be able to buy digital books and newspapers wirelessly over the 3G network of Verizon, which is joining AT&T and Sprint in supporting such devices. And by next month, the iRex will be sold at a few hundred Best Buy stores, along with the Sony Reader and similar products.

And now we learn that iRex has filed for bankruptcy. A reminder that every new technology does not necessarily succeed.

Read the SlashGear article about the bankruptcy here.

Whither Goes S&S?

Over the past five years I've talked frequently about the consequences of mega-corporations snatching up ownership of New York's publishing houses. In August, 2006, I said:

Publishing IS and ALWAYS has been a business. Publishers who don't treat it like a business don't stay in business long.

Having said that, it does make a difference whether the business in question is a privately-owned enterprise or a publicly-held one. Publicly-held companies must answer to their shareholders. And unhappy stockholders can be very vocal ... A private company (of which there are fewer and fewer publishers these days--Kensington leaps to mind) can make decisions that are more long-term in nature. They can take more chances and stick with a plan-of-action despite initial failures.

The vast majority of large publishing houses are now owned by big media companies. The tendency of such publishers is to go with a sure thing: big name authors or the trend of the day. It takes courage and insight to steer a different path.

Which brings me to an article in The New York Observer on Tuesday about "The Changing of the Guard at Simon & Schuster."

That title refers to the firing of long-time S&S publisher David Rosenthal in favor of the younger and less flashy Jonathan Karp (see my earlier post here)

The Observer says:

[The firing] of Mr. Rosenthal signals the snuffing out of a leader who did his job with an old-fashioned boldness: a publishing executive who ... cultivated a reputation for sneering in the face of the corporation that owned him ...

Several top literary agents said they weren't surprised that Mr. Rosenthal had been let go last Wednesday—Simon & Schuster had been struggling conspicuously, they said, and needed a reboot. Rosenthal loyalists, however, ... see the firing as a sacrificial gesture carried out by Ms. [Carolyn] Reidy [CEO of S&S] in order to signal to her superiors at CBS that she is actively making changes at a time when the entire company--not just Mr. Rosenthal's imprint--is putting up unsatisfactory numbers.

"When your team is doing badly you fire the manager," said the humorist Christopher Cerf ... "I'm sure there was a lot of pressure from CBS and all that."

The article stresses the irony to which everyone is pointing. Mr. Karp's very visible success at Twelve, an imprint of Hachette, stemmed from publishing only twelve books a year. Now he has taken over the reins at S&S, which produces 100 hardcover books a year.

Does this signal a move by S&S to cut the number of books it releases? Twelve famously employed a very small team. Does this indicate S&S is going to be cutting not only books, but staff?

Stay tuned ...

Read the article in The New York Observer here.

What Should Amazon Do Next?

On Monday, during the Apple Worldwide Developer Conference, CEO Steve Jobs previewed the new iPhone 4. Since this blog focusses on publishing, you'll have to go elsewhere to read about the iPhone 4's video and camera innovations. We're going to talk about e-books.

Publishers Marketplace reported that Jobs said, "five of the six biggest publishers in the US tell us that the share of iBooks is up to about 22 percent -- in about 8 weeks."

Of course, the biggest of the Big Six, Random House is not included in that figure.

Even supposing Jobs massaged that figure a wee bit, the news has to be worrying to Amazon. Although Amazon still probably accounts for most of the other 78% of the Agency Five's electronic sales, that's an amazing growth rate for the iPad in just two months.

Jobs also said that users have downloaded five million iBooks over the first 65 days the iBookstore was open. This does not equate to five million iBook sales. Remember that Apple is making free e-books available to users through Project Gutenberg. It is likely that a significant portion of those downloads were free
e-books. Especially since Jobs was not as forthcoming with the iBook sales figures.

Several observers--including Allen Weiner of Gartner and Seth Godin--came to the same conclusion about what Amazon needs to do: drastically cut the price of the Kindle, now selling for $259. The New York Times talked about Mr. Weiner's view here:

People are ... making small sacrifices to read books on a general purpose tablet [like the iPad], putting up with issues like the weight of the device and the brightness of an LCD screen.

That fact, and the undeniable market success of the iPad, may force Amazon’s hand. Mr. Weiner thinks the company must drop the price of the Kindle, to further distinguish it as an economical purchase for dedicated readers, or it must move to more versatile reading-oriented Kindles that do more than display text in black and white.

Seth Godin gave several pieces of advice to Amazon on his blog for Monday here:

The only way to get authors and publishers to embrace this device [the Amazon Kindle] is to sell 20,000,000 of them. You either become the best and only platform for consuming books worth buying or you fail. And the only way to create that footprint in the face of an iPad is to make it so cheap to buy and use it's irresistible.

Godin suggested that Amazon drop the price of the Kindle to $49, or give it away free with the purchase of a certain number of e-books.

The ball is in your court, Amazon.

The Trees or the Money?

One of the great things about being a writer in the age of the Internet is that you meet the most interesting people. My good friend Maria Zannini introduced me (online and on Skype) to my good friend, Kaz Augustin.

Kaz is a Renaissance woman born in the Internet Age. Here's her bio:

I am Malaysian-born, of Portuguese Eurasian descent … a true child of the global South. In the past, I have run my own IT consultancy business, bookshop, gym, swimming pool business and martial arts school.

So far in my life, I have been a corporate trainer, lecturer, satirist, martial arts instructor, project manager, political essayist, small business owner and am now proud to call myself an author. Together with my husband, we have lived and worked in Europe, Asia, Australia and North America. We adore our two children and tolerate as necessary evils our willful dog and two grumpy, fur-shedding cats.

Kaz, who writes as K.S. Augustin, has a new book being released this week, In Enemy Hands, through the exciting new publisher, Carina Press.


To celebrate the new release, I asked her to write today's blog, which she titled "The Trees or the Money?"

Maya has been talking for some time now (and excellently too, I might add) about the dynamic landscape of publishing. This is a question near and dear to the heart of any author trying to plan her career through an ocean of swaying ice floes, and I admit to being one of them. (The author, not the floe.)

Up till now, I've been published with digital presses. What I like about them is the foreshortened schedule, the healthy royalty percentage and the level of communication with cover artists that a traditional NY author probably doesn't get. It'd be dishonest, however, to say that I'm not envious of those NY authors. After all, they have actual copies of books they can wave in people's faces, frontispieces that they can autograph. The best I can do is point to my computer monitor and smile stupidly. And, while royalties on digital editions beat the pants off print royalties, the number of people buying print still vastly exceed the number buying digital. Throw in the offhand comment I read somewhere that the ringtone business makes more in one week than digital presses have made in a year, and it starts to get a smidge depressing.

Hmmmm, not sounding good, isn't it? Unless a really savvy player comes along. A company that has had a reputation for thinking out of the box. A company that embraces new technologies in order to make their authors more accessible to more readers around the world. Find a press like that, and things start to look up.

Well, I have. Or, at least, I think I have. I'm talking about Carina Press and the company behind it, Harlequin. Whatever else you think of Harlequin books, the company is full of very smart and forward-looking people. When they set up their digital-first press, Carina, I became very interested. So I pitched a novel to them and they accepted it.

The way I figure it, this is a bit of a gamble for both of us. Carina doesn't have a track record yet, no matter that it's an Harlequin imprint. And I have an SF romance that's probably way harder on the SF side of things than most romances. After the number of rejection slips I've received from Harlequin over the years, I never thought the day would come when I would be associated with the company as an actual author, and yet here I am. It really is a reminder of how quickly the world changes.

Carina Press launches on 7 June and my book, IN ENEMY HANDS, is one of the titles it launches with. I am utterly chuffed. As an author, and as a reader, I wish them success and hope a fair bit of it rubs off on me as well. Pop the champagne and grab a glass.

Let's celebrate!

COMPETITION: I'm giving away two copies of IN ENEMY HANDS at my blog, Fusion Despatches here at http://blog.ksaugustin.com

To be in the draw, stop by and comment at the Competition post, telling me at which blog you read about my book. You have till 30 June!

IN ENEMY HANDS

The Republic had taken everything from Moon--her research partner, her privacy, her illusions. They thought they had her under control. They were wrong.

Srin Flerovs, Moon's new research partner, is a chemically enhanced maths genius whose memory is erased every two days.

While he and Moon work on a method of bringing dead stars back to life, attraction between them flares, but that poses its own problem. How can their love survive when Srin forgets Moon every two days?

When she discovers the lethal applications her research can be put to, Moon knows she and Srin are nothing more than pawns in a much larger game. Together, they must escape the clutches of the Republic before they become its scapegoats. But there are too many walls around them, too many eyes watching. They want to run, but they're trapped on a military vessel in the depths of space, and time is running out....

I purchased In Enemy Hands yesterday at the Carina website here. You can also purchase the Kindle edition here at Amazon. Or you can purchase the sci-fi romance at Barnes & Noble here.

Congratulations on the new book, Kaz! I had to stop reading it to post this message. The Turk, I mean Srin, and Moon were just sitting down to dinner ... Back to reading ...

Karp In His Own Words

This morning, I reported that Jonathan Karp will be taking over as publisher and Executive Vice President of the Simon & Schuster imprint next Monday.

I went back to find a post I had done last fall in which I talked about an article Mr. Karp had done for the Washington Post. I'm going to repeat part of that post:

In talking about Seabiscuit, one of his non-fiction books, Karp said:

"What I learned from editing that book was just how important it is for a book to actually leave you with a feeling. I had been a very analytical guy up to that point, in terms of my editing. For nonfiction, I had always assumed that if it made sense and was well written and had an important point to it, people would respect it and like it. But that isn't what it's about, ultimately. People have to be moved by it."

My love for genre fiction was imprinted on my soul at a very early age. I was a spooky little shrimp of a kid, all orange hair and freckles, and scared of my own shadow. I was also a huge fan of boys' books. I preferred the brash courage found in those novels over the pallid books written for girls. I can remember reading all of Edgar Rice Burroughs and all of Zane Grey.

As I look back on those days, I suspect I was vicariously trying on different emotional suits, learning how it felt to be brave and fearless and decisive.

Those "disposable" formulaic genre novels provided me with the hope that I would one day be able to step out of my corner and be audacious.

I've often said on this blog that readers seek specific emotions when they buy genre novels. And I don't think that need will ever go away.

The author of the interview asked Mr. Karp "about the three main reasons why people read . . ." He responded:

". . . there are three Es. People read for entertainment, education, or the expressiveness of the language. The best books combine all three . . . I was so amused that right after Seabiscuit, people began publishing all of these books about horse racing. They completely missed the point. The book didn't succeed because people were dying to read about horses. It succeeded because it was a beautifully written story that was emotionally satisfying and interesting from beginning to end."

Jonathan Karp completely won me over when, in talking about the only novel he'll be publishing next year, he said: ". . . it's one of these novels where characters reveal things that, in your own life, people never say out loud."

What a delicious thing to say about a book.

To read Mr. Karp's June interview in the Washington Post, go here.

Karp Takes Over the Reins at S&S

I’ve mentioned Jonathan Karp on this blog before. According to his bio here:

He was previously Editor-in-Chief of the Random House Publishing Group, where he began in 1989 as an editorial assistant and worked for sixteen years, acquiring and editing such best-selling works of fiction and nonfiction as Seabiscuit by Laura Hillenbrand, … Thank you For Smoking by Christopher Buckley, …The Orchid Thief by Susan Orlean, [and] The Last Don by Mario Puzo …

In 2005, he quit Random House and joined the Hachette Book Group where he founded an imprint called Twelve. True to its name, Twelve only published twelve books a year under Mr. Karp, who became its publisher and editor-in-chief.

Last Thursday, the publishing industry learned that David Rosenthal, publisher of Simon & Schuster’s flagship imprint, the eponymous Simon & Schuster, was leaving after thirteen years and that Jonathan Karp would be taking his place.

Deadline New York reported here on Wednesday night that “Simon & Schuster CEO Carolyn Reidy is removing S&S publisher David Rosenthal.”

Slate’s The Big Money said here that:

S&S reported a decline of 6 percent in the first quarter's sales which was also 25 percent down from two years before … Karp's Twelve imprint was cast as an antidote to big-imprint publishing. Using his phenomenal track record for picking hits and nerves-of-steel willingness to pay big for projects …Karp showed that a small imprint could generate sales volume to match a big shop like Simon.

The New York Post reported here:

Rosenthal is not known for being a profligate spender, though one rival said he's had "no big failures, but he hasn't come up with a lot of hits lately" … Both Karp and Rosenthal are known as editors who have single-minded dedication to their own authors -- but who often ignore other editors within their own companies and are thought of as difficult.

The Los Angeles Times reported here that: “More than half of [Twelve’s] 37 books [published since its inception] have been bestsellers ...”

The New York Times said here that at S&S, “where he will begin on June 14, Mr. Karp will oversee the publication of more than 100 hardcovers a year.”

Karp’s expertise has largely been in narrative nonfiction. It will be interesting to see how he makes the leap to a large commercial fiction house that is publishing an average of more than eight books a month.

As someone who has thoroughly enjoyed a number of Mr. Karp’s offerings, I wish him well.

His Mother's Voice

I saw this video on ABC this week.

Jonathan was born deaf. He received a cochlear implant in his right ear two years ago when he was eight months old. This video records when he first heard his mother's voice. I never get tired of watching it.

Magic Bleeds

Regular readers of this blog know I'm a big fan of urban fantasies. Among my favorite authors are Jim Butcher, Mark del Franco, Mike Carey and Patricia Briggs.

Two years ago I did a review on Ilona Andrews' first Kate Daniels' fantasy set in Atlanta, Magic Bites. This morning I'm punchdrunk because I stayed up until 3:00 AM reading the fourth in the series, Magic Bleeds.

Ilona Andrews is the pseudonym of a husband-and-wife writing team who live in Portland. As I said in my first post about the Kate Daniels' series, the world-building is very intricate. Kate resides in an alternate Atlanta--a city devastated by the war between magic and technology. After centuries in which man's technology dominated Earth, magic is fighting back. When tech is up, everything works as it should: electricity, cars, telephones, modern weapons. However, when a wave of magic hits, all technology fails and weird creatures run free. Then the magic fluctuation subsides, spells fail and technology works again.

Kate has been working as an agent of the Order of the Knights of Merciful Aid, the group that protects the city from paranormal threats. However, her relationship with the lead Knight-Protector, Ted Moynohan, is strained. He doesn't approve of Kate's friendship with non-humans like the shape-shifting population of Atlanta.

In Magic Bleeds, Kate's relationship with the leader of the shape-shifters, Curran Lennart, comes to a crisis point just as an ancient monster, called the City Eater, arrives in Atlanta. When Kate realizes that the City Eater shares her bloodline, her first instinct is to flee. Her foster father taught her how to disappear, and he prepared safe places for her to run if necessary.

But Kate is bound by the hostages to her heart. Fleeing would mean leaving Julie, her ward; Andrea, her best friend; and Curran ... who might just be the love she never expected to have.

Magic Bleeds is a terrific read. The novel combines action with relationship-building without sacrificing one for the other. The authors have done a great job of establishing Kate's character, motivations and goals. They also continue introducing new characters, which revitalize the series. My favorite this outing was Kate's new dog, a scruffy poodle she finds in a cellar beneath a bar.

[Yawn] Now I have to head to work.

Self-Publishing Picks Up Speed (But For Whom?)

My favorite Wall Street Journal writer Jeffrey A. Trachtenberg has an article today titled "'Vanity' Press Goes Digital." In the story Trachtenberg reports "digital self-publishing is creating a powerful new niche in books that's threatening the traditional industry ... by circumventing the establishment."

Indie publisher Richard Nash says something I've been harping on for the last couple of years: "It's a threat to publishers' control over authors ... It shows best-selling authors that there are alternatives--they can hire their own publicist, their own online marketing specialist, a freelance editor, and a distribution service."

Trachtenberg says Amazon has now upped the ante by raising the royalty rates they are offering authors. For an e-book priced between $2.99 and $9.99, Amazon's royalty rate is doubling, from 35% to 70%. That means for an e-book selling on Amazon's Kindle for $9.99, the self-pubbed author will earn $6.99.

Last week, Apple announced a self-publishing program for its iPad, which will match Amazon's 70% royalty rate.

If an author already has a brand and a following, that 70% rate will be tempting. As Mr. Nash says in the article: "If they already have a loyal fan base, will they want 70% of $100,000 [for an e-book] or 15% of $200,000 for a hardcover?" Trachtenberg says Amazon has already struck deals with Stephen King and Stephen Covey.

Of course, the catch is that phrase "already have a loyal fan base." Trachtenberg says, "Today, the Kindle store accounts for about 70% of the U.S. market for e-books." Getting YOUR e-book noticed among all those offerings is tough. Unless you have a platform, selling an e-book on Amazon is unlikely to be any more successful than selling a p-book through one of the vanity presses like Author Solutions. I would not recommend it for a novice author.

My favorite "doesn't have a clue" line from the article was this:

The industry says that most authors will stay with their print publishers. More than 90% of sales still come from physical books.

In January, the New York Times had an article about companies that go out of business when new technology comes along:

"Businesses do die, even big ones. Leslie Hannah, a visiting professor of economic history at the London School of Economics, studied the 100 largest industrial companies in the world between 1912 and 1995. Almost half of them disappeared, 'and more than a quarter experienced bankruptcy or a similar close shave with it' ...”

Get a clue, New York.

Go here to read the Wall Street Journal article.

Go here to read the New York Times article.

Texas AG Probes Publishing Agency Model

Publishers Marketplace had an interesting tidbit on Monday:

...the anti-trust division of the Texas Attorney General's office has been engaged in its own preliminary questioning ... that appears to focus on pricing practices for ebooks and Apple's entrance into the market in particular.

I tripped my way over to Wikipedia to find an entry on price fixing, which said:

Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand. The group of market makers involved in price fixing is sometimes referred to as a cartel.

Price fixing may be intended to push the price of a product as high as possible, leading to profits for all sellers, but it may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied.

Price fixing requires a conspiracy between two or more sellers or buyers; the purpose is to coordinate pricing for mutual benefit of the traders.

I went back through the archives of Publishers Marketplace looking for the earliest mention of what has come to be called the "agency model." I found it on January 19:

The WSJ reported lasted night that HarperCollins is negotiating terms with Apple for making ebooks available on the company's forthcoming new device, along with unnamed other publishers ...

Apple, whose representatives are in New York for meetings this week, is acknowledged by participants as currently negotiating with nearly all (and most likely all) of the six largest trade publishers, though those negotiations were supposed to be confidential ...

Certain very important themes are identifiable, however. The key for most publishers is ... the opportunity to change the basic selling terms of ebooks with at least one major trading partner in a way that lets publishers take back control of pricing and reassert their vision of the value of an electronic version of a book.

So, let's see what we have here.

Multiple participants on the same side of the market ... Five of the six biggest publishers ... Check

Working to maintain market conditions so that a price is maintained at a given level ... Check

It may also have the goal to fix ... or stabilize prices ... Check

The defining characteristic of price fixing is any agreement regarding price ... Check

Have I mentioned that I live in Texas? I have? Good.

Here in Texas, we have a saying: If it walks like a duck, looks like a duck and quacks like a duck ... it's a duck.

Stay tuned ... And go here to subscribe to Publisher Marketplace.

A Publisher's Value Redux

Yesterday, I wrote about the article Stephen Page wrote for the Guardian on what ebooks will mean for publishers.

Other publishers have now jumped into the conversation. What I find frustrating is what my high school history teacher called the difference between debate and critical thinking.

My teacher taught us that debate begins with taking a position and then finding evidence to support that position. Critical thinking, on the other hand, begins with analyzing a subject prior to taking a position and being willing to adjust your position as new evidence is uncovered.

The publishing industry appears to be starting from the premise that "We need to defend our house," which is really just their position in the debate. They then present evidence to justify that stance, all the while pretending they are engaged in critical thinking.

There was a panel titled "Are eBooks Good for Authors?" at the BEA (Book Expo America) at the Jacob K. Javits Center in New York, NY last week. BEA used to be called the American Booksellers Association Convention.

My first issue is with the title of that panel, which seems to imply that authors have a decision to make regarding whether their works are offered as ebooks.

The decision on the viability of ebooks belongs to readers, not to either authors or publishers. WAKE UP, PUBLISHING. That train has already left the station. If you are hoping your authors will throw themselves across the train tracks to save you, I'd remind you that "Denial is not a river in Egypt."

Publishers Marketplace (PM) reported that Sourcebooks' CEO Dominique Raccah argued at BEA that "it's just plain wrong...to pretend that ebooks cost nothing to make."

To buttress her debating position, PM said Raccah had a PowerPoint slide that listed 26 things that publishers do along with her claim that "only two of [these] bubbles represent physical distribution and manufacturing."

I'm assuming her remark was intended to point out the small number of tasks unique to p-books. The catch is that she included multiple tasks in some of the bubbles on the slide. As an example, those two bubbles for p-books included four tasks unique to that medium (printing, manufacturing, physical distribution, and physical warehousing. Here are all the tasks listed in Raccah's bubbles:

• Copyedit and Proofread (1 & 2)


• Content Development (3)


• Content Design (4)


• Creation of Content Portable Files (5)


• Printing/Manufacturing (6 & 7)


• Physical Distribution (8)


• Physical and Digital Warehousing (9 & 10)


• PR, Marketing and Advertising (11, 12, & 13)


• Retail Marketing and Sales (14 & 15)


• Trade Shows (16)


• eCommerce Administration (17)


• Licensing and Administration (18)


• Trademark/Copyright Protection (19 & 20)


• Accounting: Royalties (21)


• Positioning (22)


• Cultural Filter (23)


• Creative Partner (24)


• Author Branding(25)


• Niche Community Building (26)
  

I find it ironic that publishers are suddenly hot to build communities of niches. I can think of only three publishers who made the effort to build niche communities before it became recently fashionable:

1) Harlequin: romance
2) Thomas Nelson: Christian
3) Tor: sci fi and fantasy

Now suddenly Raccah lists it as a publisher task.

And don't get me started on the task of "cultural filter." A look at the offerings in my local bookstore would suggest we are filtering the culture of vampires and zombies.

I'll repeat what I said on Monday. I think publishers need to focus on three things: (1) The widest possible distribution on the day of release; (2) The best possible price on that first day of sales; and (3) The fairest possible royalty to authors.

If they do these things, authors will flock to them, and their continued place in the publishing universe will be assured.