We’re all used to the idea that publishers are struggling to stay afloat in this brave new e-book-and-pirate-infested recessionary world. This is why they can’t pay greater royalties on lower-marginal-cost e-books, and why they want to keep their e-book prices high so consumers don’t come to devalue e-books (or to protect sales of hardcovers, whichever explanation you prefer).
But every so often publicly-held corporations are required to let the public know how they’re doing, and Simon & Schuster just announced that, thanks to e-books, its recent revenues are up considerably.
For the three months to 31st March, Simon & Schuster’s operating income before debt and amortisation (OIBDA) more than doubled to m. The publisher said it was driven by lower shipping, production and returns costs because of the increase in digital sales.
On FutureBook, blogger Agent Orange notes that this makes publishers’ refusal to increase royalty rates on e-books look even more transparent.
The conglomerates dog in the manger approach to the issue of e-books is doing them no favours. The day is fast approaching when a truly major international author will realize they are going to be greatly better rewarded by being published by Amazon because they will offer them a sensible share of the revenues they generate.
I would say that it also suggests publishers may be a little too worried about piracy—judging by those reports, at least one of them is still doing fine even in the middle of a recession—and that if they were to fiddle with their e-book prices a little to find a more optimal (which is to say, lower-priced) position on the price-demand curve they could do even better.
Which in turn suggests that perhaps publishers aren’t quite so likely to be driven out of business by the new way of doing things after all.
From their press release:
E-book sales momentum was considerable (up 88% compared to Q1 2010), accounting for approximately 22% of revenue in the United States and 5% in the United Kingdom. This development is the result of very brisk sales of e-book readers at the end of the year. …
e-book sales will continue to grow in the United States, albeit at a less upbeat rate than in the first quarter, to reach 15% to 20% of revenues. E-books could account for 5% to 10% of revenues in the United Kingdom in 2011.
From The Bookseller:
More info in the article.
From The Bookseller:
More info in the article.
That’s what The Bookseller is reporting. Penguin’s ebook sales doubled in the first quarter of 2011 as compared to the 1st quarter of 2010.
… Penguin UK c.e.o. Tom Weldon predicted that e-books would make up 4% of Penguin sales in 2011, up from 1% on average in 2010. Penguin also announced at that time it was going to treble its investment in digital content in 2011 compared to 2010.
Even though this is an e-book blog, from time to time I poke my nose over into the world of computer gaming to point out some parallels. You could say that Internet game distribution is a sort of first cousin of the e-book, as they share a lot of commonalities. They’re both about telling stories—in books, you read the stories, but in games you experience them.
More importantly, both started out as strictly physical means of media distribution—dead trees for books, dead dinosaur discs for games—but have moved into the digital forum where they’re more vulnerable to bit-copying piracy. The book publishing industry has been in a bit of a tizzy about this, but Valve, one of the leaders in digital game distribution through its Steam platform, has been looking at it as more of an opportunity.
I’ve already mentioned the way Valve’s sales entice pirates away from piracy, and how its multi-platform stance adds value to its products from a customer point of view, but Valve is just as canny about marketing, too. I touched on its Portal 2 ARG (Alternate Reality Game) way back when it started by retroactively dropping hints into Portal 1, but they did something even cleverer recently when they got together with a bunch of independent game developers to hatch up a cross-promotion scheme that would boost not only Portal 2 but their own games as well. Ars Technica has a great article looking at the promotion from the point of view of one of those publishers.
The idea was that the game developers would come up with additional levels for their games incorporating the GLaDOS character from Portal, and the games would be bundled together into a sale bundle (called the “Potato Sack” bundle, an in-joke referring to an element from Portal 2). What’s more, it would tie into the ARG: Playing the indie games would contribute to moving up the release of Portal 2 by a few days.
Gamers who unlocked a specific achievement from each game received the Valve Complete Pack, a bundle of every game Valve has ever made—and the ability to give any duplicates of games they already had to friends. The bundle is a 0 value, but since it was provided digitally there were no media costs involved in giving it away.
For the new content, Valve was happy to turn over one of its most popular characters: GLaDOS, as well as the voice actor who brought the character to life. The pressure was on to create something that did justice to the concept, and the work was described as being "some of the toughest work done all year, possibly in years," but it also proved highly rewarding. "The amazing thing is how cool Valve was about this. With most publishers, you have to sign ten pages of paperwork just to sit down and have a drink with them," [Leo Jaitley of developer Dejobaan Games] explained. "Valve sat us down, pointed out the fact that there were no hidden cameras, lawyers, or NDAs, and showed us what they were thinking. They had us play through what existed of Portal 2, and then just had us go crazy."
And in return for their participation, the indie developers experienced a rather nice sales payout. “
The Ars Technica article concludes with, “The only question: what could possibly be done to top this?” And that’s a question that anyone who sells digital, piracy-prone media should be asking themselves. Valve is thinking outside of the box (which you’d think should be easy, given that digital content doesn’t have to be packaged in a box!), pleasing fans and developers alike.
What kinds of similar promotions could e-book publishers be doing?
Well, bundles for starters. Valve regularly drops sale bundles, often of independent games. The Potato Sack Pack was a rather noteworthy (and huge) example, but smaller bundles of half a dozen games often make their appearance—and it also has individual every-game-from-one-developer bundles like the Valve Complete Pack mentioned above.
Why don’t we see publishers bundling all the books in a series together as packages? Well, actually we do, to an extent—Baen did it when they picked up the Liaden and Kencyr series a few years ago—but the agency publishers haven’t been doing that. There are some series out there that are positively huge, and extremely well-liked.
For instance, Rex Stout wrote 33 novels and 39 short stories in the Nero Wolfe series. I imagine plenty of fans would be happy to pay 0, maybe even 0, to get a bundle containing an e-book of every one of those if it represented a savings over the cost of buying each book individually. People who might never have bought that many Wolfe novels at piecemeal prices might well be happy to drop a lump sum if it meant they could get their hands on everything. (Of course, such bundles are already circulating for nothing in peer-to-peer, thanks to the work of scanners.)
Regardless, publishers really should be looking at the things that pioneering e-sellers like Valve are doing. Computer gaming may be even more piracy-ridden than e-books, but Valve isn’t just sitting around complaining—it’s giving customers more reasons to buy. If only publishers would do the same.
Apple nearly doubles net profit, iPad sales dip
Apple nearly doubled its quarterly net profit on record iPhone sales but iPad sales dipped and the company is dealing with the "mother of all backlogs" in meeting demand for the tablet computer.
Read more on AFP News via Yahoo! Singapore News
Apple nearly doubles net profit, iPad sales dip
SAN FRANCISCO: Apple nearly doubled its quarterly net profit on record iPhone sales but iPad sales dipped and the company is dealing with the "mother of all backlogs" in meeting demand for the tablet computer.
Read more on Channel NewsAsia
Windowing—the practice of releasing some book formats first and others (such as e-books) later—has been poorly received in the e-book world, even though it’s an extension of the long-held practice of separating hardcover and paperback releases in order to make the most money possible out of those willing to shell out for a hardcover book.
Now, in a blog on The Bookseller, bookseller Martin Latham wonders whether it might not be time to get rid of the hardcover/paperback windowing practice. He points out that all the marketing dollars associated with a book are spent to drive the hardcover release, leading to lost sales months later after the enthusiasm has waned of those people interested in the book but not interested enough to pay hardcover prices.
Customers have interrogated me for 25 years about why, when they want to buy a product, its publisher will not sell it at a man-in-the-street price until many months later. When I explain that the actual date is unknown, and depends on how long the publisher can milk a dwindling minority for the hardback price, well, the customer backs away with an expression that says "get me out of here and back to a normal retailer" or even, "when your planet exploded, how many of you survived?" Now that the book can be downloaded on publication day, this Dance-of-the-Seven-Veils journey to paperback seems even madder.
He suggests that the delay of paperback releases, and the associated loss of sales to people who would have bought one when the book was first released, is one factor responsible for killing bookshops.
On the other hand, I don’t know if there is any alternative, at least from publishers’ point of view. If hardcovers and paperbacks were released at the same time, would the added sales from paperback buyers offset the loss from those who would otherwise have shelled out bigger bucks for the hardcover? I’ve mentioned before that hardcover segmentation is a way to charge a premium on the impatience of fans who absolutely have to read something right away, and if impatient people no longer have to pay the premium, publishers could be out a lot of money.
Though Baen is showing one way to extend that premium on impatience into the e-book world. Just yesterday—the day it came out–I paid (about 2 1/2 times what the final version will cost) for an E-ARC of the latest Sharon Lee & Steve Miller Liaden novel, Ghost Ship. And, having read it, I am still quite satisfied with my decision. I had been waiting for that book for literally years and was not too much to pay to read it as soon as possible. It’s still considerably less than a hardcover would cost, however.
When you get right down to it, the whole paper book distribution system is still living in the past. Hardcover books don’t sell out all their printings and end up on discount tables stealing sales from the full-priced hardcovers and paperbacks and not putting anything in authors’ pockets. What happens when paper book sales dwindle over the next few years to the point where not enough books sell to cover the system’s overhead costs? I would hope publishers are working on coming up with solutions now, before that happens—but who knows?