Publishers Show Their Technophobia-It’s Time to Fight Back!

This morning, the Wall Street Journal reported that Simon and Schuster and Hachette Book Group are considering delaying their major releases in eBook form until FOUR MONTHS after the hardcovers go on sale. This is an extraordinarily long time, and they are being blatant in admitting it is an attempt to slow the growth of eBooks over hardcovers while they still can. I sent the information out to the team here, and asked what they thought…and they had a lot to say!

Amy – I understand where the publishers are coming from. They are thinking in the lines of traditional publishing venues. In traditional publishing, hardcovers first, then paperbacks. It’s easy, and it has always worked for them. The problem is that its almost 2010, and the traditional publishing model doesn’t work anymore. Look at what is going on with newspaper publishers. Newspapers are fading out to make room for their Internet counterparts. My mother commented that her usual Sunday New York Times is half as thick as it used to be, pre-Internet. Or how about the music industry? We use iTunes, Rhapsody and Napster vs buying a CD at a store anymore. There was a Virgin MegaStore in Orlando, FL that closed its doors to go to the online model. Or the television industry? Can we say Hulu?

Traditional media outlets are changing. While the older generation still wants to feel a book in their hands, the newer generation wants it in electronic format on their smartphone, desktop, netbook or laptop. And, in this instant gratification society we have now, they want it NOW.

So, why not give it to them? What is it REALLY going to hurt in the long run? Let them have it in e-format. They’ll sell more A LOT faster and make up the difference from slower hardcover and paperback sales.

As for piracy, I don’t see it happening so much with ebooks. There has been a lot of content out there for years  with services like eReader, Fictionwise, etc but I haven’t seen or read much about book piracy.

Take the proverbial “big girl” pill Mr and Mrs Publisher, and go digital.

Joel – We are living in a digital world. Books need to go that direction. Since the 90’s I have been waiting for the day I can carry a few books and not have to break my back doing it and now I can. However, that is not why publishers should embrace eBooks. They should embrace them because without them, they will die from massive expenditures on paper and ink. It’s a simple fact that once you have the production stream completely digital that costs will go down. Sure the storage costs aren’t insignificant, but considering how many eBooks can fit on the Kindle 2, imagine how many they can fit on a multi-terabyte SAN in their Data Center. Plus now they don’t have to have all of this infrastructure for the hard copy. There is no need for warehouses and trucks spewing diesel fumes. Going digital can reduce the impact that publishers have on the environment.

Also, since the reproduction cost of a digital book is nearly zero, books are no longer restricted by scarcity of material goods. They can sell an infinite number of books and books can never go out of print.

Amy is right. They are is clinging to an old model. A model where the publisher has ultimate control on the product. In the digital world. this is gone.

Mike – You understand where the publishers are coming from? I’m not sure I do! I mean, isn’t the whole hardcover / paperback thing based on maximizing profits in the first place? Sort of like the theater to DVD release thing for movies – the goal is to hit with the biggest profit gainer while the item has maximum pull, then strike again with the lower-priced but still profitable item before the property fades to obscurity.

eBooks are a technology-based product (obviously), and as such have a much shorter shelf life than physical products based on the audience that are consuming them at this relatively early stage in their mainstream acceptance. Just look at what has happened with movies – I was still paying full price for repeated viewings of Star Wars well into 1978, but now even the hottest of films is lucky to still be in widespread release after six weeks.

What do these publishers think will be the popularity of electronic versions if introduced so long after initial release? I imagine it will be a huge flop – unless they completely change the business model. If they release at Day 1, they are competing with hardcover, where folks generally have a reason to buy – either the title or author or something appeals to them enough to need it now and be willing to pay a premium price (though recently price wars have significantly eroded that!). Hardcover purchasers also tend to hang on to their books and care more about keeping them in good condition. Paperbacks have a different model – people want them cheap, toss them around, loan them out and often don’t worry if they simply go from person to person and never return.

Which sounds more like the model for eBooks? Well, the DRM means you are stuck with it forever if you buy it, and can perhaps loan it once to someone else for a finite time period, at which point it is all yours forever. And while the list price of digital copies is lower than a hardcover, it certainly isn’t much different than I paid for the last Harry Potter book at launch! And as Joel pointed out, eBooks carry no physical production costs, no inventory, no transportation and warehousing and shipping – and no environmental impact.

I don’t see how publishers can be so parochial as to miss all of this. I mean, ebooks aren’t exactly new – I’ve been reading them in text form on PDAs for 20 years and bought commercial ones more than a decade ago! They have an opportunity to make money and look like a good public citizen and are willing to squander it. Why? Because of the perception that piracy will ruin them. Sure there will be piracy – heck, I remember before the last few Harry Potter releases hearing about scans released in text formats on the internet! Same is true with music and videos and games – there is piracy everywhere but digital models help with sales. The difference now is that people have already shown a willingness to pay a reasonable price for non-physical assets. This is no longer new stuff!

It will be interesting to see what happens. I imagine that like all other things there will be good sales numbers, bad sales numbers and the evidence of an impact of piracy on sales, and as everywhere else someone will be waiting to spin it all based on a preconceived notion. In the end, we are heading to digital books, and the first one to do a really good job of adopting a customer-friendly model will win … big.

Clinton – Like Amy, I see what Simon & Schuster are trying to do but to me this is a classic example of an old business trying desperately to hold onto the past. Telecommunications companies have struggled with this as well when it comes to VoIP. This, in my mind is no different. eBooks are a new way of doing business and most publishers don’t seem to fully grasp the impact it is having on the marketplace. I can’t tell you when I bought a new paper-based book (I did buy some recently at a bookfare to raise money for my local senior citizens group – but that’s a different motivator). Every book I buy – and now but two of my magazines – are on my Kindle. It’s easy to have them there, especially when traveling.

I pretty much agree with everything Amy has said: It’s time to embrace new media formats by the publishers.

Dan – I see it this way- either publishers approach this either wanting ebooks to succeed or wanting them to fail. The latter option will be an issue for them however since this is where things are going whether they like it or not.

Making a two class system for releasing books may help the bottom line in the short-term but it won’t in the long term. Yes, it may delay the greater adoption of the electronic approach but Ebooks are the future and either publishers get on the train or they don’t.

Doug – Hell, Clinton; the person from S&S admitted that in the interview. “But with new [electronic] readers coming and sales booming, we need to do this now, before the installed base of e-book reading devices gets to a size where doing it would be impossible.” Translation: we want to squeeze out as much money from our old, dying model for as long as we possibly can, and if that means we have to screw over eBook readers in the meantime, so be it.

I think Prof. Greco’s estimate of a 33% (or so) increase in the eBook market is waaaaaay too low. Of course, it’s easy for me to say that—I’m not going to win or lose money on my bet. But after seeing any number of technologies begin and grow—PCs, cell phones, iPods, the Web—it seems clear that eBooks have reached that upward bend in the classic yeast-growth curve (http://www.maquah.net/media/IR/YEAST_GROWTH_CURVE.html). Technology, in my experience, shows a slow build-up as early adopters shake out the bugs, manufacturers figure out a way to bring the price per unit down, and whatever-it-is starts getting noticed by the world at large. Then it’s Katie-bar-the-door for a while, and then when the technology matures and achieves market saturation, it flattens out (or maybe takes a dip and flattens out).

Maybe I’m preaching to the choir here, but look at it this way: the web was around for several years. Then, Mosaic came out and you got a lot of nerds using it for a while. Then there were authoring tools and a higher saturation level of PCs that could do high-quality display, and bam, it’s everywhere. I think that’s where we are with eBooks. So in my view, S&S is going to have about as much success as the music industry did with audio tapes and then with electronic music—i.e., none. It’s King Canute trying to hold back the tide. Good luck with that!

Another thought: the publishers’ take seems to be, “But we can’t continue as an industry; this breaks our model!” So change the model, kids. Give everyone who buys a hardcopy version the electronic version for free. Sell the books on a demand basis, rather than what is essentially a consignment basis (where publishers have to eat the costs of returned books from book stores, including the shipping, one guesses). Test out new models of distribution—maybe you can set up high-quality printing shops near several bookstores and do print-on-demand, bound in wire-o or perfect-bound instead of hardcopy, but charge a price lower than hardcopy and higher than paperback. Give people vouchers, like frequent-flyer miles, for each e-book they buy, and when they get so many, they get a free hardcover (or even a free eReader).

I don’t know what the new model should be. All I know is, the old model is dead, and the quicker they convert, the easier and cheaper the conversion will be. The record companies fought MP3 and iTunes for years and years, and what did it get them? A lot of lost money, and a teeny-weeny market share.

Sorry for being so long-winded, but I’ve been working in online doc for nearly 20 years now; it’s not just my avocation, it’s my vocation, if you see what I mean.

Judie – I disagree with one thing that Amy said: I believe that eBook piracy is rampant, and it has been for years — if you know where to look. Oddly enough however, much of it seems to revolve around authors who resist putting their books out digitally (yes, JK Rowling, I am looking at you). When people can easily purchase titles for a fair amount, they do not go seeking pirated ebookz.

If the publishers are going to play games like this, then I think they need to think very carefully about what they are doing to their customers. If they are going to delay publishing new books to digital format by 6 months, then I fully expect to pay no more than paperback prices for any new eBook – under $6. If they want to get $9.99+ from me, then I want the book when it is first available. Otherwise, I will just condition myself to wait; it’s not like I don’t have a backlogged reading list, anyway!

I firmly believe that forward-thinking authors must see the value of getting their books out to the reading public now (and thus getting money in their pocket now). Authors who get it are going to insist that their material is available digitally.

To me, the decision by Simon & Schuster and Hachette seems like a great way to get authors to leave their publishing firms for other firms that are with the times.

Chris – I have to agree with Amy. I don’t think eBook piracy is rampant at all. eBooks have suffered from two things – lack of availability, and lack of a consistent format and/or platform. Music piracy didn’t really grow when iTunes became popular, so the idea that digital piracy will grow as eBooks become popular is bunk. There have been studies that have shown that people will usually buy the stuff when they can get it AND they don’t feel they are being ripped off. Eliminate those things and you are good to go! That’s why iTunes AND the original 99 cent pricing was so important – it made the music consistently available and it made it at a price that people thought was fair. Apple didn’t invent it – they popularized it. If the latest rumors are true then they might be the ones to do it again in the spring with eBooks – who knows? But then again, isn’t reading supposed to be a dying form?

Doug – Rowling drives me crazy. She wants people to have the “book reading experience,” but she’s fine with her stuff being released as audio books? It doesn’t make sense. I mean, she’s denying herself an additional revenue stream, and she doesn’t have a good reason!

Even more, when books 6 and 7 came out, Rowling had the opportunity to define the eBook market. She could have embraced a format, or an eReader, or something, but she just decided that eBooks are, I dunno, beneath her or something. So all the people who could have been brought onto the eBook train weren’t, and those of us who want to read her books in eBook format are screwed. It was a stupidly-wasted opportunity.

Carly – Everyone else has covered a lot of my thoughts, but here’s a few things to consider…

Simon and Schuster publishes Dan Brown’s books. So they know fully well that 5% of their sales of “The Lost Symbol” were from eBooks! That’s a HUGE amount for a book that was available at every possible retail outlet (including some grocery stores!) On top of that, as an industry, book sales are in decline. Bookstores are struggling to turn a profit. And what’s the one bright, consistent growth spot for publishing? eBooks! It’s like they sat down and said, “Hello, hand that feeds us. CHOMP!”

All this is going to do is drive people to buy less books up front. Is the publishing industry in such great shape that they can defer sales for four months? Do they think people who are paying ~$260 for an eBook reader are also enthusiastically dropping $20-$30 on bulky hardcovers? More than likely, they’ll pre-order the eBook version and not touch the hardcover. It’s a terrible idea and it’s just going to cause them to lose sales and credibility.

Your Turn!

We want to hear from our readers! What do you think? Will this affect how you buy books? Will you consciously choose not to buy from a publisher that practices this kind of delay?

This has not gotten a lot of notice around the web so far…WE WANT YOU TO CHANGE THAT! Re-tweet this post, put it on your facebook page, get the word out there! We want to show the publishers that consumers DO NOT want this kind of publishing delay, so spread the word and tell every eBook fan you know!

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