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Monday Midday Links: Disintermediation and the valued supply links

Several people noticed that the comments to the controversial post of Christopher Navratil, the publisher of Running Press, over at Publishers’ Weekly had disappeared. I emailed and received a prompt response from PW. According to PW, this is a technical glitch site wide due to a change over in commenting systems:

I’m writing in response to your note to Jim Milliot about the comments on the Running Press Soapbox. We have not deleted the comments. We switched comments systems to a third-party solution last week. Doing so caused the old comments to stop displaying. We are now working to get them back up. We have not deleted them, we just need to figure out how to display them. Please be patient.

Thank you,
Craig Teicher
Senior Web Editor

Having run into my own problems, I can appreciate the challenge this will be.

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Joseph Esposito writes that disintermediation is occurring everywhere in publishing, not just between author – publisher – reader but also between publisher – retailer/library – reader. Disintermediation is the phrase used to describe what happens when an intermediary gets booted from the supply chain between the producer of a product and the end consumer. Libraries are a form of intermediary and publishers are always looking for a way to reduce the number of barriers to the consumer. Esposito writes that disintermediation has taken a long time to occur because each link in the supply stream has added value up today. Esposito’s article is fascinating and well worth the read, even if you don’t agree with everything he says. His long history in publishing provides valuable insight, particularly to a neophyte like me.

If there is an entity experiencing disintermediation, then that entity has to recreate its value. Publishers, for example, have to sell themselves to authors as providing a value that the authors could not ordinarily (or easily) obtain. Random House was successful in its courting of HP Mallory and Macmillan in its acquisition of Amanda Hocking. However, putting out a sub par product may lead to questions of value by all parties.

Barnes & Noble is transforming itself into a digital company through the production and sale of the nook. Libraries are just another part of the supply chain that need to reinvent themselves. Take a look at this blog post by Jenica P. Rogers is Director of Libraries at the State University of New York at Potsdam at how ill equipped she believes libraries are in reinjecting their value into publishing / reader ecosystem.

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Nathan Bransford writes about the “tragedy” of the 99c book and how the future of publishing will be to determine what is the optimal price point for each book. Bransford uses the term “price discovery” as it relates to Groupon and how it is using its service to discover what price individuals are willing to pay for differing products. Ideally, price discovery is used in conjunction with price discrimination. It is said that Amazon and other retailers engage in A/B testing of price. The idea is that you price two separate but similar products at differing prices and see whether the increase or decrease in price makes a difference in sales. Self published authors do that as well, moving their book prices from $.99 to $2.99 to see what, if any, increased revenue comes from the higher price, knowing that there may be a reduction of sales but also an increase in margin.

Bransford points out that self published authors are able to undercut traditional publishing prices to their benefit. But what if traditionally published books also are priced low. Is a reader going to spend their money on the lower priced traditionally published books or the self published books? Obviously it behooves self published authors to have a product that is indistinguishable in terms of cover, blurb, and presentation as the traditionally published author.

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Jeannie Lin posted a detailed summary of the session she led at RT Bookcamp. It’s worth a read. I think I’ve mentioned before that I enjoyed these group discussions so much because the opinions were so diverse but despite the differences, the conversations were respectful and robust. A couple of interesting points:

4. There are programs such as Worldreader.org which distribute books to developing nations through e-readers. So whereas in the U.S. print books are used for charity because distribution and printing is cheap, globally the use of e-readers can actually be a more economical solution because it negates printing, shipping & distribution costs.

5. Many teens are still reading print, but then going online to participate in fan forums where they can interact with other readers and do activities such as share fan fiction.

Each one of the points brought up could have been its own session and we really only skimmed the surface.

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A reader previously pointed out the documentary, Guilty Pleasures, that was originally released in the UK. The US release has occurred and Smart Bitches has an entire blog post on the documentary. I’d like to see the documentary myself, but I appreciate the in depth coverage provided by librarian Jennifer Lohmann.

Overall, I was left with the impression that Moggan had no desire to actually understand her subjects. She was an outsider looking inside a culture and she made a shallow effort to learn why Roger wrote a novel and Hiroko, Shumita, and Shirley read the novels but ultimately it was a superficial effort. She read hundreds of Mills & Boon, but I get the impression that she allowed them to confirm her stereotypes of the genre rather than opening herself up to a new understanding. Perhaps she is confusing understanding with endorsement and, in her effort to make sure she didn’t endorse the genre, she forgot to try and understand it.

You’ll have to read the rest of the post to find out what else Jennifer found to be of interest in the documentary. The part regarding the cover model was pretty fascinating. Our own Sarah F has a write up of it that we will post later in the week.

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According to the AAP numbers, ebooks have outsold paperbacks for the first time in February 2011. While this makes a great headline, the true meaning is greatly obscured. The AAP reports that ebook sales were $90.3 Million. The press release does not break out the numbers for Adult hardcover, trade, or mass market but merely lists the total as $156.8M. The print book sales data comes from 84 U.S. publishing houses where as the ebook data comes from 16 houses. The ebook sales are not broken down by category and presumably all the trade sales, both adult and ya, are included in the $90.3 million figure. The one metric that is reliable is that digital book buying is increasing but not at the same rate print book buying is decreasing.

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Some other numbers to ponder include Brian Murray’s statements at the London Book Fair as reported by the Bookseller:

Brian Murray said the number of US e-readers—grown from 15m a year ago to 40m today—was having a disproportionately large effect on the market because they had reached “core” readers, those buying over 12 books a year. He said: “Some of the heaviest book buyers no longer visit bookstores.” He said some e-books had a 50% share of total sales during the first few months, a “watershed” for the trade.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

19 Comments

  1. Nikki
    Apr 18, 2011 @ 14:23:13

    It is interesting that core readers only buy 12 books a year. Regardless, I guess I qualify because I have pretty much wholesale moved to ebooks. I bought my kindle and my print purchases have virtually disappeared. Unless the book is not available via Kindle or iBooks I buy it online. I walked into a bookstore 2 weeks ago for the first time in 4 months and walked out because it was so disorganized.

    I do however agree about the quality of the product affecting my purchasing. There are certain writers and publishing companies that I simply refuse to buy again if they have consistently had poor editing or the sample available only consists of their warnings. The price point really affects my willingness to try a book. I have found myself much more willing to experiment in that price point than in the higher points.

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  2. Robin
    Apr 18, 2011 @ 14:33:07

    The one metric that is reliable is that digital book buying is increasing but not at the same rate print book buying is decreasing.

    What do you think is occurring in the gap? Do you think people are seeking out other forms of entertainment, or is there just not enough data yet to tell?

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  3. lucy
    Apr 18, 2011 @ 15:07:39

    @Robin:

    Maybe the reason is price. Books are getting pricier.

    I haven’t bought a print book-except for textbooks-in almost a year. Partly due to my kindle, and partly due to the fact that every time I move I have to get rid of my books.

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  4. Laura Vivanco
    Apr 18, 2011 @ 15:11:24

    There’s been a little bit of a mix up and your link to the guest review of Guilty Pleasures goes to thebookseller.com and your link about the AAP numbers goes to the guest review at SBTB.

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  5. Brian
    Apr 18, 2011 @ 15:50:03

    The one metric that is reliable is that digital book buying is increasing but not at the same rate print book buying is decreasing.

    Or it is, but it’s from pubs/authors/areas not covered by the AAP numbers.

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  6. Robin
    Apr 18, 2011 @ 15:51:27

    @lucy: Price has definitely made a difference for me, in that there are some Agency priced books that I won’t buy, so the lost paper sale isn’t being made up by a gained digital sale. But I doubt I’m in the majority on that practice, so I’m curious about why the paper market is falling faster than the digital market is gaining.

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  7. DS
    Apr 18, 2011 @ 15:58:03

    I’m wondering if the Trade Paperback form– and the publishers’ fascination with it– is having a negative effect on the market?

    Anecdotally, I’ve been waiting for Marie Brennan’s In Ashes Lie to come out in MMPB. It was first published in trade 6/2009. (I don’t want it enough to pay Trade or $9.99 Kindle price and our library doesn’t have it.) Now she has another book that was published in trade 8/2010. Still no sign of MMPB. So I broke down the other day and bought remaindered copies for $2.99 each. I hope the author gets something out of that.

    I would have bought MMPB or a cheaper Kindle copy new had either been available.

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  8. Anonymous Author
    Apr 18, 2011 @ 16:12:39

    Oh, ugh on that Lora Leigh book. What with the mention of the typos and everything, I bet what happened to her is what happened to a friend of mine: someone sent the wrong draft of the book to production and it got printed.

    This happens because publishers cut everything to the bone and the person who sends things to production is an unpaid intern who is overloaded anyway. They send the wrong file, nobody checks it thoroughly because they’ve given THAT job to someone who’s already working 60 hours a week, and BOOM. The book gets printed like that.

    This, authors, is why you make note of the LAST changes you made and when you get your author copies you check to make sure those changes were made as soon as they arrive–so that errors like this can be caught as quickly as possible.

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  9. Merrian
    Apr 18, 2011 @ 17:17:13

    “The one metric that is reliable is that digital book buying is increasing but not at the same rate print book buying is decreasing.”

    I suggested in a comment on an earlier post and still think it; that it isn’t that take up of digital = decline in print on a one-for-one basis but the shrinking distribution system for print books. Add in social media, movies and gaming as other options then consider digital on top of that and I think the jigsaw is almost complete.

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  10. Courtney Milan
    Apr 18, 2011 @ 17:23:04

    “The one metric that is reliable is that digital book buying is increasing but not at the same rate print book buying is decreasing.”

    Do we actually know this? The AAP statistics are aggregated over major publishers. Amanda Hocking alone made a ton of money in February. And if you look at the Amazon Top 100, about half of the books are published by small/independent publishers. Without a reliable metric for the missing books, we don’t know whether the money is leaving books, or if it’s going to books not being tracked by the AAP.

    I’m not suggesting that money isn’t being lost–just that on the data indicated, we only know that large publishers are losing money. We can’t conclude anything about the buying habits of the public.

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  11. Kerry
    Apr 18, 2011 @ 19:27:54

    Goodness, it only takes 12 books a YEAR to be a core reader? So far this year I’ve bought 24 books a MONTH and there’s still 10 days to go in April.

    I got a Kindle in March and my book buying has gone insane since then. I’m beginning to think I need an intervention (not that I WANT one). I admit I’ve bought books on sale or got ones free, but I’ve bought a heck of a lot too, including ones I already own in paper that I want as ebooks.

    Thank goodness ebooks can’t fall down on your head. At the rate I’m accumulating them, if they were a real pile, they’d kill me instantly.

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  12. Eliza Evans
    Apr 18, 2011 @ 19:47:42

    @DS:

    DS, from what I understand, having asked this question of a guy who runs a small artsy press, is that the remaindered books are paid for by the bookstore just the same. Authors don’t lose out, the bookstore just gets less profit on the book.

    If I’m wrong, I hope someone will correct me. It certainly made me feel better about picking up remaindered books on the rare occasion I’m in the bookstore anymore. (I’m almost all e-book now, too.)

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  13. hapax
    Apr 18, 2011 @ 20:28:11

    FYI, the link for the Jenica Rogers blogpost goes back to the Esposito article again.

    Is this the post you meant?

    http://www.attemptingelegance.com/?p=1031

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  14. Brian
    Apr 18, 2011 @ 21:48:40

    @Eliza Evans: To the best of my knowledge, from reading various things, authors aren’t paid on remaindered books. IIRC when a book isn’t selling all that quickly anymore and is getting hard to keep track of and maintain in good quality in a warehouse (or books that totally failed and had lots of returns) they’re basically sold by the pallet load very cheaply to companies who then sells them as remainders to book stores.

    Perhaps it depends on the publisher or the contract, I’m not sure.

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  15. Merrian
    Apr 18, 2011 @ 23:01:12

    @Anonymous Author:

    This isn’t the first of LLs books to have these sort of problems. In another series (the one with the SEALS), one book had a key characters name changed in the final scenes plus many typos throughout the book. I recall no problems like these with LLs Ellora Cave books.

    I think it is interesting that these problematic books are produced by a mainstream big name publisher which leaves me laughing at the notion that these publishers are the special gatekeepers to quality book production and so deserving of special consideration.

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  16. Leslie
    Apr 18, 2011 @ 23:29:15

    I have to agree with @DS and @Robin – I was given a Nook as a gift and, on more than one occasion, have walked away from an impulse purchase in the bookstore, thinking “I’ll put it on my Nook,” checked Nook pricing, and decided not to buy an electronic book for the same price (or within a buck or two) as a hard copy only because of the cost. My purchases from OmniLit and AllRomance have jumped b/c they offer a reward with multiple purchases.
    The delay in releasing TPs as MMs is part of the problem, but Agency pricing is so aggravating. I troll my library’s e-lists more aggressively than I did the shelves.

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  17. Wahoo Suze
    Apr 18, 2011 @ 23:53:18

    I think I’m buying fewer books now that I’m digital (around 20 books per month, but that includes novellas, which I would NEVER buy in paper), and I’m definitely not buying from the major publishers, on account of they’re just not available to me. If I don’t put some effort into it, I’m not even aware that authors I enjoy have new books out.

    I am on line a lot more than I used to be, so that’s less reading that I’m doing.

    It seems to me that if the publishing industry really wanted to know what was happening to their business, they’d do some actual market research, and find a way to hear what their consumers wanted from them. They seem to be doing a lot of poorly-thought-out experiments instead.

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  18. Mike Cane
    Apr 19, 2011 @ 18:27:51

    >>>“Some of the heaviest book buyers no longer visit bookstores.”

    No, really, wut? DUH!!

    Freakin GODIN figured this out two years ago!
    It’s not the rats you need to worry about

    And those in publishing are only catching on NOW?

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  19. Rory
    Apr 20, 2011 @ 20:14:47

    I am a die hard paper book reader I just switched to ebooks because I could not get new releases in the bookstore. I don’t know how many weeks in a row I have gone in looking for a favorite authors new release and found that it was not in stock. If they aren’t going to stock the paper books what do they think rabid fans are going to do?

    ReplyReply

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