The Unbearable Darkness of E-Books

So once upon a time, and not that long ago really, I could look at my Nielsen Bookscan numbers and know that I was really and truly getting my weekly report card. Now, it's hard to be sure if I'm even getting an incomplete.

And it's all because of those darned e-books.

With Tanya Huff's permission, let us look at her excellent series of "Valor" military sf novels.

Two years ago when Valor's Trial came out in hardcover, I could very easily look at those numbers and look at the numbers for the hardcover of The Heart of Valor from the year before, and I could see that it was good. Over the first few weeks, hardcover sales of the 2008 release were up something like 40% from the year-before book. And now I'm looking at the release of The Truth of Valor, and that's up by 25% from what The Heart of Valor did in 2007, but it's down 15% from what Valor's Trial did in its first few weeks in 2008. Down 15%!!

Panic time? Well, no...

Let's look at just the Kindle. 2008 it's a novelty item not yet into its second generation just starting to get caught up on the orders from its first several months of existence. Now, though we don't know exactly the Wiki entry for the Kindle reports a number thru the end of 2009 between 1.5 million from outsiders and 3 million from informed insiders. Shall we all agree by now that sales are almost certainly over 2 million? Amazon in its fudgy statistic kind of way has told us it now sells more Kindle books than hardcover books, which isn't exactly the same as saying that Kindle sales outpace hardcover sales on any given book.

And that's just the Kindle. There are millions of iPads sold, and I can iBook Truth of Valor for $11.99 in seconds. And then we've got the Nook and the Kobo and all kinds of other gizmos and gadgets all with apps that allow me to read to my Android from my SmartPhone while sitting on my Desktop and balancing my Laptop with my other hand with all of these devices probably wirelessly syncing to one another.

And there is no Bookscan for e-books, at least not yet. The sales for e-books are totally opaque. Even more opaque than was once the case for print books, where I can visit stores and count copies on Friday vs. copies on Monday.

So what, really, does it mean that the hardcover edition of Truth of Valor is down 15% from the hardcover edition of Valor's Trial? It means nothing, nothing at all!

Did the e-book business also drop 15% like the hardcover did? Well, fat chance of that. I'm certain that more people have purchased e-books this year than two years ago. But by how much? If I think e-book sales have doubled, then a 15% drop is a smaller drop. If I think e-book sales quadrupled, which they may well have, then the 15% drop on Nielsen Bookscan for the hardcover becomes an increase in total sales inclusive of e-books. The 15% "decrease" could actually be a 15% increase, all dependent on those e-book sales increases.

Why can I even contemplate the thought that e-book sales might have quadrupled in two years? Well, for a new book like Tanya's the print sales are still the lion's share of copies sold, but every month more and more little tidbits like these... For Elizabeth Moon's Hugo-nominated Remnant Population, the e-book sold three times the number of copies as the trade paperback on her most recent royalty statement. For David Louis Edelman's Jump 225 Trilogy, which are wonderful very tech-oriented novels very well-suited to an e-book adapting audience (I think they're the first set of books to really take the conceptualization of William Gibson's Neuromancer and bring it along into today), I've seen numbers for Kindle sales that are about equal with the Bookscan scales, so total e-book sales could well exceed those of print.

Hence, when I'm looking at Tanya's statements, there's this big gaping hole of uncertainty where I know the e-book numbers are up but I've no way to fill in that blank right away. And it's hard to even say when I can. Depending on if an e-book vendor reports monthly or quarterly, or with a 15 day, 30 day or 45 day lag, the first royalty statement I get for this book could reflect e-book sales for one month to 30 September of for three months thru 30 November or anything in-between.

Suffice to say, I hate this. I like information, I feast on information, and here I don't know, instead I compare the Kindle store rank to the bookstore rank on Amazon, guess what it means, then read tea leaves. And there are more and more instances like with the new Tanya Huff book where I have to recognize the presence of "known unknowns." And while the example here has a two year gap between books in series, the growth in e-book sales is now so strong that I can't even trust 2010 over 2009 comparisons.

This I can trust: if I negotiate a deal tomorrow with a publisher, and I'm looking at a 5% or 25% drop in hardcover sales, the publisher will almost certainly try and tell me that the sales are down by 5% or 25%, and hope I'll ignore the fact that the e-book sales are up by 300% or 400% and the total sales actually increased by 10%.

Bottom line, more and more, day by day, the print side of things isn't the full story for the publishing business.

If you haven't yet tried Tanya's Valor books, the place to start would be with the DAW omnibus edition of A Confederation of Valor, which has the first two books for just $8.99. Tanya served in the Canadian Naval Reserve, so she knows her stuff. Book Loons says in reviewing The Truth of Valor, "Tanya Huff writes the best space opera around." Night Owl reviews says "the Torin Kerr books are my favorite novels in this genre." And Book Yurt thnks "Torin is definitely who we'd all like to have our back when the shit hits the fan."

And Sept 30, we get word of this rave review from BlogCritics.org "Huff has taken the genre light years beyond what anybody in the past could have imagined it being. This is not just a good book for its genre, it's a good book—period."

blatant linkage

My client Tim Akers took some time away from his work on Dead of Veridon to give us his thoughts on the Nook he got for Christmas. Click here and enjoy. And then you should enjoy Akers' debut novel The Heart of Veridon, which Library Journal has rightly hailed as a key title in the modern steampunk movement, and then reserve his forthcoming The Horns of Ruin. We've heard of sword and sorcery, or s&s, and now we add the third s of steampunk to create a fully-realized s&s&s fantasy which people are giong to be talking about come November.

He mentions an article in the NY Times today by Randall Stross, an author on hi tech topics. I, like Stross, don't see the dedicated ebook reader as a lasting technology, that being said a lot of people are betting a lot of money that Randall and I are wrong. And Randall gives a lot of attention in his article to Amazon's notorious tendency to say lots without saying anything. The only problem here is that Amazon has actually sold a shitload of Kindles and I do see them all over the place. So Amazon might be coy on giving hard sales #s as a matter of policy or of habit, the iPad may be selling on a much quicker pace than the Kindle when it launched at the end of 2007, but they've still sold a lot of these suckers, they've sold a ton of books for people to read on these suckers, and Randall and I might be entirely correct that this isn't what people will be reading on in 20 years but certainly near term the Kindle is an important part of our lives. I'd have come across this article when I read the hard copy of the Sunday times, but I first saw courtesy of a tweet from Tobias Buckell, who is settling back from Gencon.

E-Reading

So the Father's Day advertising war for various e-book devices, including the Kindle, Nook and iPad, was followed by the after-Father's Day price war. B&N came out with a bare-bones Nook that sells for $149 but has only Wi-Fi access, i.e., no 3G or no downloading a book anywhere with a cell phone signal. The fully-equipped Nook was also given a price cut. Amazon immediately responded by dropping the price of the Kindle to $189. Borders was already starting to sell some e-book readers, including first shipments in time for Father's Day, for $149. They're now offering a $20 gift card with that, and double Borders R Reward bucks. Since you get $5 for $150, then buy this and a truffle ball and your net price for the Kobo eReader becomes $120.

One article I read says that B&N is now making more Nooks than Amazon is Kindles, so they seem to have some quiet success leveraging their store presence to sell the e-reading device. And Apple has sold over 3 million iPads in just a few months, even though it's impossible to actually buy one anyplace because they're in a perpetual state of being sold out. Nobody knows how many Kindles or Nooks have sold, but the combined total would be well up into seven figures.

In part, this is a natural thing in consumer electronics. As more and more are being made and purchased the component price goes down and the fixed costs are more easily leveraged and the price comes down.

But there's also more flexibility on the gadget price because of the switch in pricing on the e-books. Last year Amazon was paying $13 for a DEAD AND GONE e-book and selling it for $10, losing money every time out. This year, DEAD IN THE FAMILY is now publisher-set at $12.99, and Amazon gets to keep $3.90 of that. When you make $4 on every book instead of losing $3 you can price the gadget for less.

e-Reading

Here's an interesting post from Pyr SF editor Lou Anders comparing some of the iPad e-reading apps.

The Kindle came out in December 2007 and it was a while before I started to see them. The iPad clearly seems to be ahead in month-to-month sales comparisons if my own experiences are any indication. Multiple people at Balticon had. My client Peter V. Brett got one the day before we headed down to the convention and was telling multiple people over the weekend that he never wanted to be without and would probably never again take a laptop around with him ever ever again. On the train ride back to NYC yesterday, somebody else in our car already had an iPad. This is a lot of adaptations, awfully quick.

I've been kind of holding out on principle, that if they want to sell me one, I should be able to go into a store and buy one. But the more I see them around, the more I'm not so sure I can hold out. Especially seeing the iPad in the very thin case which Peter purchased for his, squeezing into his shoulder bag, taking up about as much space as some very big square-bound issue of a magazine, my iPad envy was definitely ratcheting up.

I spoke with a B&N bookseller recently who wasn't radiating enthusiasm for the Nook. Told me they've got to spend a lot of time trouble-shooting them instead of selling books. They're on a daily sales quota that adds up to around a couple dozen that should be sold over the course of the week, which quota they have made only rarely.

The E-Book Revolution

So, the iPad! While I type in one window, I'm watching the keynote speech on the Apple web site.

Though I used the Kindle for over a year, I'm not the hugest fan of it. It allowed me to do things I couldn't do before, and I loved it for that. But it didn't allow me to do many of them very well. I could read a manuscript without carrying it around but not in cold weather and take notes on the same device but not easily and the relay to the author was cumbersome. I could read the Washington Post every day without schlepping into Manhattan to buy a hard copy, but the reading experience wasn't very good. I liked the Sony Reader less, because the note-taking interface was cumbersome and the glare on the screen distracting to me. And the Nook was surprisingly bad to me for how much learning curve should have been curved.

I've never been a big laptop fan. They're portable, but not fun. When I live-blogged the Oscars last year, I had to sit at a desk instead of perch in my recliner because it's just too cumbersome to sit with a laptop in a recliner.

I have no complaints about my iPod Touch. I read manuscripts quickly, in colder weather than the Kindle. The limiting factor is whether I have to wear gloves or not outside, which is a much lower temperature than when the Kindle started to degrade. I can take notes fairly easily and send them to my clients right from the device. And it plays music. And shows off photos. And does video. And has a calculator. And when I'm traveling and curled up with it in my hotel room with wireless, I can lose hours to surfing the web just like when I'm at home.

So Apple seems to get it. You have a kind of giant iPod Touch, and Steve Jobs demonstrates it sitting in a comfly leather chair which is exactly the place that I might envision perching with it. It has a dedicated iBook reader. I can pay a fairly reasonably priced $14.95/month to AT&T to have a limited amount of wireless access, or $30/month for as much as I please. All the time, or for thoee trips when I can't hook up my Touch into the hotel wireless?

So I like the idea of the device, but time will tell how the actuality of it works.

Now, what does this mean for publishing?

Fun Times!

In either a good or a not so good kind of way.

Publishers are not fond of Amazon's control over pricing and terms of sale for the Kindle. Apple is willing to give the publisher more pricing power. This led to a dispute over the weekend with Amazon not selling titles by Macmillan USA, which includes Tor, St. Martins, Farrar Strauss, Holt and other imprints, in a dispute over the sales arrangements. And then maybe backing down and agreeing Macmillan could price its own books. I say maybe, because the seeming concession may have come with conditions we don't know about. These kinds of things happen. Not that long ago Costco pulled Coke products from their stores in a pricing dispute. Amazon UK has had some big publisher disputes. Apple is Apple, but Amazon sells a lot of physical books that are still 90% of publisher revenue. But Amazon isn't the only internet store in town. If I were Borders, I'd have done an e-mail blast right away with promo code AMZN24 to say "hey, can't buy [bestselling Macmillan title here], we'll sell it to you and give an extra 10% off your entire order."

I do think Macmillan's position in the matter (CEO letter here) is the better one, which may be why Amazon ended up seeming to cede. The world is full of variable pricing for the same thing at different times and different places, from bargain matinees vs. Saturday night at the movies, the paperback vs. the hardcover, the last-minute fare deal vs. the prepaid reservation vs. the regular rate. Just because Amazon woke up one morning and decided a bestselling e-book should cost $9.99 doesn't mean an e-book should forever cost $9.99 or less.

Also making things interesting... the Amazon iPod Kindle application will work on the iPad. I do my manuscript reading using Stanza, which is now owned by Amazon, and that will work on the iPad. Will Amazon continue to want to add value to Apple's iPad even while Apple is trying to squirrel in on Amazon's e-book business? Then again, how will the Apple Pages application work on the iPad? When I use Pages on my iMac, I can do track change and comments right in a manuscript, export to Word, and send away to a client. Will I be able to do that on an iPad? And will anyone care what Amazon does or does not do to support the iPad when they can iBook?

As I said, Fun Times. I think there's a lot of potential in the iPad, but I think the arrival of Apple as a major player in e-book retail is going to lead to a lot more shoving matches like what we've seen between Amazon and Macmillan as all of the different e-tailers and the publishers all jockey for position.

Our client Tobias Buckell is among those who've done particularly good commenting on the Amazon/Macmillan dispute.

In the midst of this, JABberwocky is starting to explore how it can best enter the e-book world. We've spoken in recent weeks with people at Amazon, BN.com and Rosetta Books and are starting to think seriously about all of this. Lots of interesting questions. Do we go with a third party vendor like Rosetta or eReads? Do we become our own eReads? Depending on that, where do the costs of cover art and scanning/converting reside? How much upside do you trade to reduce the investment in those costs? Do you go one way for some books and another way for others?

Those are just the back-end decisions. At the front-end of what we actually show to the world... Since Simon Green has the most enticing out of print backlist do we start out with a single author-based promotable program and see what happens? Or do we look for original content, short story collections perhaps, from half a dozen top authors and make that the launch? Or go with that, and the top two dozen other backlist titles? Or make our entry with 100 books or 250 all at once? Feel free to vote!

And we'll start to explore these questions just as Apple, Amazon and the other publishers jockey for position. With as many as 40 different e-book reading devices scheduled for a big unveil over the course of 2010. With different permutations of format, exclusivity, cross-compatibility, etc. etc.

e-book frenzy

So Borders has announced its e-book strategy, and Random House is making a land grab.

The Borders announcement fascinates me on several levels. If my distant memory serves, a long long time ago in a galaxy far far away, Borders contemplated opening Canadian stores in partership with Heather Reisman, now the CEO of their e-book partner and major Canadian book retailer Indigo. This did not come to pass because of the difficulty in finding a way to structure the deal that would pass muster with Canadian content regulations for book retailers. Or at least that's my distant memory, which may or may not be correct. And it was after this did not come to pass that Heather started to put together the Indigo retail empire in Canada.

Borders is late to the e-book game. As they were late to the internet. Late to having a modern inventory system and in-store computer system. Late and still not arrived to having a rapid supply chain. But unlike the internet business, being late here might be to Borders' benefit. I don't consider even the Kindle to be a dominant unapproachable category killer, nor any current e-book reader for that matter. When I'm content to read manuscripts on an iPod Touch, it's safe to say that the future of e-books may not even be the e-book reader. Part of it will depend on whether they do a better job of putting something good out the first time around instead of doing the bad rush job for the holidays represented by the B&N Nook. The press release has precious few details. Well, this should all be very interesting to watch play out over the next year or two. It's too bad I'll have to watch as someone with a lot on the line as it all plays out instead of as an interested rubbernecker.

The Random House letter is a lot of "yadda yadda yadda" followed by a "don't mess with us." Yes, Random House is doing all kinds of on-line thingamabobbies, Suvudu this and Library Thing that, with a free e-book here and a galley contest there, here a link, there a post, everywhere an interview (you want to sing the above to the tune of Old McDonald for your fullest enjoyment), but so is everyone else. But as with publishing itself, where the barriers to entry have come down so much that the idea of paying a Vantage Press thousands of dollars to publish a book seems stunningly quaint, the barriers to entry for doing on-line book promotion are practically non-existent. I've got clients like Jim C. Hines who do quite a bit of this kind of thing, most of it done without overwhelming assistant from his publisher's publicity people. If you have no idea what any of this is about, the Random House touting of its electronic horn sounds much more impressive than I think it really is.

As to the suggestion that Random House has e-book rights on ancient contracts that don't mention e-books, don't specify e-book royalty rates, long pre-date the existence of e-books... Um, yeah, right. I don't know if there will ever be an ultimate court case where the Supreme Court will end up having to decide. One of the biggest brouhahas previously between Random House and Rosetta Books, a company led by my one-time boss Arthur Klebanoff, ended up with an out of court settlement after some initial rulings that were not totally favorable to Random.

To me, the bottom line on this is that the major publishing houses all started to revise their boilerplates in the early 1990s to specifically cover electronic book editions. If they are so gosh darn confident that all of the older contracts covered this, why bother to go to all that effort to change your boilerplate?

Of course, this letter is a model of gentility compared to the form letter publishers send out to try and get authors to sign away after the fact on granting e-book rights or specifying e-book royalties. Which all sound the same, no matter what publisher they come from, and which should never, ever, ever be signed, because they always do things like forget to mention that adding in e-book rights without looking at the entire contract and things like the out of print clause could be the equivalent of signing away the book forever. Now why would the publisher forget to mention that in the letter?

Nookie Nookie

I played around some with a demonstration model of the Nook at a Barnes & Noble in Manhattan on Thursday and was not impressed.

E-Ink is E-Ink, so the screen look like all the others. But if the initial Kindle had a knock that it was too easy to turn the pages accidentally, I found it took too much effort to turn the pages on the Nook. And when I did turn the pages, the refresh rate was very slow, a good two to three seconds. B&N did acknowledge this problem, and they say it will be fixed with a software update in the near future. But isn't that the kind of thing you should work on before you release the product? Anyone think they decided to rush out something for the holidays?

And then there's that LED screen at the bottom that's used for navigating. It's a nice idea, on one level, because one knock certainly on the first generation Kindle was the awkwardness of the little sliding side thingie to navigate around. But I think if they were doing the second screen they should have worked very hard to make it an intuitive and natural sort of thing, and I didn't really find it to be. It has the same learning curve as the awkward navigation on other e-book readers. I often found myself pressing the wrong button or finding that the button seemed to do something different than I would have intuitively expected.

So I think I'll stick to reading on my iPod Touch with Stanza for the time being. I was disappointed, really; with all this time to learn from Amazon's experience and mistakes, I was expecting the Nook to be a much clearer step up in the e-book gadget war than it is at this moment.

That being said, the fact that you have an e-book reader that people can go around and play with in many B&Ns and look/see/touch/feel is definitely a major step forward in adaptation of the technology. Borders has had little kiosks for the Sony Reader, but their investment and the quality and accessibility of the presentation was nothing or nowhere like what B&N is doing to put the Nook into people's hands.