We were struck by the appearance in today’s New York Times of two prominently placed stories about media in transition. Both are well worth reading.
Dave Streitfeld explores the enduring appeal of the traditional book in the digital era.
“Even as the universe of printed matter continues to shrivel, the book — or at least some of its best-known features — is showing remarkable staying power online. The idea is apparently embedded so deeply in the collective unconsciousness that no one can bear to leave it behind.”
Writing that “efforts to reimagine the core experience of the book have stumbled,” Streitfeld notes that a number of tech startups that have tried to incorporate social networking or multimedia into books have either gone out of business or been forced to change their business model.
Amazon today unveiled a plan that lets indie booksellers turn their customers into Amazon customers.
Under the program, Amazon Source, independent booksellers buy Kindle devices at 6% below retail price for resale in their stores. The stores then get a 10% cut of Kindle ebook sales to customers on those devices for the next two years.
“We believe that retailers, online or offline, small or large, should be striving to offer customers what they want—and many customers want to read both digital and print books,” said Russ Grandinetti, Vice President, Amazon Kindle. “For many years, bookstores have successfully sold print books on Amazon—now Amazon Source extends this opportunity to digital. With Amazon Source, customers don’t have to choose between e-books and their favorite neighborhood bookstore—they can have both.”
Many independent booksellers are already selling ebooks, through an agreement made by the American Booksellers Associate and Kobo in the summer of 2012.
Selling Kindles in retail bookstores is not a new idea. In the UK, the Waterstones chain, which is restructuring in an attempt to stem losses at its 300 stores, is giving it a shot.
Amazon’s press release quotes enthusiastic booksellers involved in the Amazon Source pilot program.
“JJ Books is excited to expand our selection to now include Kindle devices for our customers. We are selling Kindle e-readers, tablets, and accessories in our store to expand our customer base and build toward the future bookstore model. We feel that Amazon is the leader for e-readers. Teaming up with Amazon to bridge the move to electronic books will help us find a means of long-term viability for our independent bookstore. Kindle will help us bridge the evolution of the bookstore into the Internet age,” said Jason Bailey, Co-Owner of JJ Books, Bothell, WA.
Bill Petrocelli, co-owner of Book Passage in Corte Madera, CA., has a different take:
“There’s a huge problem for any bookstore that might be tempted to do this: the store would be handing over to Amazon.com all of the information about its customer database,” Petrocelli said. “It reminds me of the situation that happened about a decade ago when Borders contracted with Amazon to handle its on-line business. Amazon ended up with the customers, and Borders went bankrupt.”
Barnes & Noble today released its new $119 Nook black-and-white e-reader to positive reviews, but also to skepticism about the device’s ability to challenge the Kindle Paperwhite, given Amazon’s dominance of the ebook market and B&N’s own problems developing a solid digital business.
James McQuivey, an analyst at Forrester Research, told the New York Times that the new Nook was “spectacular,” but added:
“If you were just engineering a device that you wanted people to fall in love with, then yes, it’s a great device. But the bigger problem is, will people perceive that Barnes & Noble as a company will be around to fulfill the promises that that device makes? It’s a shadow that hangs over the entire Nook enterprise right now.”
When Scott Turow stopped by CBS This Morning last week to promote his new book, Identical, co-anchor Charlie Rose turned the discussion to Turow’s “beef with Amazon,” while Norah O’Donnell brought up his April New York Times piece on “The Slow Death of the American Author.”
Turow said Amazon’s below-cost ebook pricing, “destroys physical bookstores and drives the reading public into the ebook, which of course Amazon dominates. They’re a great competitor and I don’t mind fair operation of the market. I don’t like unfair tactics.”
Book Industry Stimulus? 23 Million Customers Poised to Automatically Receive Book Buying Credit from Publishers’ Settlements with DOJ
More than 23 million “consumer accounts” are eligible to receive refunds from the $166 million pool of money put up by the defendant publishers who settled with the DOJ in the Apple e-book price-fixing case, Publishers Weekly reports.
Those refunds may add up to a mini-stimulus package for the book industry, since only 48,124 of those eligible for refunds opted to get a check instead of a credit to their account. That will leave well over 23 million customers with credits they can use to buy print or digital books.
Citing as a source Rust Consulting, the firm retained to administer the settlement fund, PW reports that, “23,073,840 customers of Amazon, Apple, Barnes & Noble, Kobo, Google, and Sony have been directly notified via e-mail or by postcard that they are eligible to participate in the settlement.”
A second round of refunds will depend on the outcome of a trial to determine monetary damages Apple must pay, which is scheduled for May 2014.
On Friday, Judge Denise Cote will consider whether to grant the Justice Department’s request that Apple be forced to accept long-term monitoring and sweeping changes to how it operates or impose the much more limited consequences Apple wants.
In a proposed remedy submitted to the court, The DOJ contends that Apple must be compelled to take steps to “ameliorate the harm its conspiracy caused to competition and consumers.” Among the remedies proposed is a five-year restriction on engaging in agency pricing agreements for any content. That means Apple would be required to throw out its contracts with the five publisher defendants in the price-fixing case, agreements that were set as part of the publishers’ settlements with the DOJ.
In its reply, the company calls the proposal “a draconian and punitive intrusion into Apple’s business.” It asks for “reasonable limitations on Apple’s ability to share information,” similar to what is contained in the publisher’s settlement agreements, a prohibition on retail price MFNs that also echo the publishers’ settlements, and “reasonable antitrust training obligations.”
Apple points out that the publishers’ settlement agreements already prohibit publishers from entering into agency agreements without discounting for a two-year period, which the court has endorsed as long enough to “restore retail price competition to the market for trade e-books, to return prices to their competitive level.”
In addition, Apple argues that any injunction should only apply to the publishers involved in the conspiracy, not the thousands of independent publishers who also sell books through Apple.
Objecting to the proposal to dictate terms for non-book content such as music, movies and apps, the company contends, “There is no justification for this invasion into Apple’s businesses that were not directly at issue in this lawsuit, for which no conspiracy allegations were made.”
The DOJ also wants Apple to operate under the oversight of an outside compliance officer for 10 years, necessary, says the DOJ, since the conspiracy was orchestrated by people at the highest levels of the company. Apple responds that, “This unduly burdensome remedy is plainly punitive, not to mention out of proportion to the circumstances of this case.”
The Department of Justice today asked Judge Denise Cote to force Apple to throw out its existing contracts with the five publisher defendants in its ebook price-fixing case and essentially impose a five-year ban on agency model terms.
“Apple shall not enter into or maintain any agreement with any E-book Publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps where such agreement likely will increase, fix, or set the price at which other E-book Retailers or retailers of other forms of content can acquire or sell E-books or other forms of content,” according to the proposed injunction filed in U.S. District Court.
Under the proposal, Apple would also have to let other ebook retailers provide links to their ebookstores from their iOS apps, “allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.”
Apple’s compliance with the new rules would be overseen by a monitor. And the company would have to hire an internal Antitrust Compliance Officer, who “will be hired by and report directly and exclusively to the Audit Committee of Apple’s Board of Directors.”
We’ll have more on this story Monday.
How do you protect the intellectual property of authors in the digital market?
The question was posed this weekend to Tim Hely Hutchinson, group chief executive of Hachette UK, during an interview with the South China Morning Post. Hutchinson responded:
“One of the most important new roles for publishers is the protection of copyright – how do we protect authors against piracy and casual file sharing? We have a subcontractor who sweeps the internet every day to find infringing editions and we send every infringer a takedown notice. If they persist we take legal action. And that is successful – the books do get taken down.”
Hutchinson also discussed DRM (encrypting digital files such as ebooks to discourage illegal copying), a hot-button topic in some circles:
“And on casual file sharing, we strongly support the maintenance of DRM – digital rights management – so all the files, e-books and audio are encrypted and all our contracts with people like Amazon make it impossible for people to share or to lend. Lots of people say take DRM off, it’s old-fashioned, but that’s wrong. Our primary job is to represent authors and authors deserve to be paid. One way is by making sure we keep the DRM on.”
While the interviewer did not specifically mention piracy in China, widespread theft of intellectual property in the country makes DRM all the more important.
Last year Hachette opened a sales office in Hong Kong, stepping up its focus on the region. During the interview, Hutchinson contrasted Asia’s robust growth to the “relatively small and static market” for books in the U.K. And he said Asian readers tend to prefer nonfiction such as business and self-improvement books. “It’s less literary and more to do with getting on in life,” he said.
Double-Digit Ebook Sales Lift Adult Trade Market; Steep Drop in Children’s/Young Adult Sales Attributed to Hunger Games Fall-Off
Sales of adult ebooks continue to rise rapidly, according to new figures from the Association of American Publishers. In the first quarter of this year, sales of adult ebooks totaled $328.2, up 13.6% from the same time in 2012, making the category the largest measured in the organization’s StatShot report. Sales of children’s and young adult books in print and digital form dropped nearly 25% compared to last year, when, as Galley Cat points out, The Hunger Games was in movie theaters, spurring sales of the series’ books.
The increase in adult ebook sales, while modest compared to the growth shown in some previous reports, allowed overall adult trade sales to tick up 3.3% despite lackluster demand for print books. Hardcover sales were flat at $226.5 million, trade paperback sales rose less than 2% to $306.6 million and mass market paperback sales dropped 14.6%, to $89.9 million.
All figures are based on sales by 1,192 publishers who report to the AAP.
Publishers Weekly has more, including stats on audiobook sales (related story: Amazon and the Growing Audiobook Market), which continued to grow strongly as it shifts rapidly from physical media (CDs and tapes) to downloadable digital delivery:
Judge in Apple Case Cites Publishers’ “Frequently Coordinated” Efforts to Upend Amazon’s $9.99 Ebook Pricing
In her ruling against Apple today, Judge Denise Cote cites witness testimony as well as documentary evidence including emails and other records of communication considered during the three-week price-fixing trial. She says circumstantial evidence also “compellingly” supports the idea that Apple gave publishers the means to pull off a pricing conspiracy they couldn’t accomplish on their own.
Here’s the sequence of events as detailed in Cote’s decision:
Late 2008-through 2009: Major publishers who would later be named as defendants along with Apple tried “frequently coordinated their efforts” to pressure Amazon to raise its $9.99 price point for digital books.