What makes Harkaway’s ideas even more valuable, in my opinion, is that they’re not limited in scope to just the big publishers. Anyone who publishes, including self-starting indies and small niche presses, can and should take note.

Here’s what he suggests, although the paraphrased explanations that follow should be blamed on me:

1. Make your content available. Don’t window the digital release in a misguided attempt to boost hardcover sales; you’re wasting opportunities to sell to new consumers who wouldn’t or can’t buy the hardback.
2. Price wisely and think in tiers. Don’t charge a premium price for a substandard (i.e., typo-ridden or image-lacking) digital version. At the same time, add value incrementally to digital versions so that you can segment them into different price points. First, this will help you give the consumer the option to spend as much as he’s willing to spend (always a good thing for profits). Second, this will give you a way to “window” digital content in a useful way, by letting you release differently priced versions of digital content to correlate with the traditional release schedule.
3. Don’t cheat customers. Harkaway doesn’t quite use such strong language–he says customers don’t want to pay twice for the same content. But ultimately it comes down to feeling cheated as a consumer: if you paid for something, you don’t want to have to buy it again, and then again, each time you want to consume it on a different platform. Here’s an idea: if you really do want to charge a consumer on a per-platform basis, then you must drop the price to a “rental” level as an acknowledgement of how limited the access is that you’re selling.
4. Skip DRM. It adds cost to your production budget. It creates potential situations where your customer will feel cheated. It’s arguably ineffective. The people telling you that you need it are frequently the ones who are selling it. Most of the arguments for it are based on emotion, not business intelligence. If it’s too late for you–because there are higher-ups or board members who insist on it and are too slow/scared/suspicious to try something new, then at least start pushing for an exit strategy.

“DRM is not all that” [Futurebook]
“The Rules Of Harkaway Club: everything I think I know about ebooks, but probably don’t” [Futurebook]
www.nickharkaway.com

It’s become ubiquitous, too: think about how every social network service presents some sort of low-level and instant feedback on itself, from Twitter followers to Facebook friends, Diggs to Google Reader Likes (also now in use on Google Buzz). Older Internet communication, like email or instant messaging, tended to focus on two-person relationships and relied on self-evident participation measurements–you could ask the other person if she received your email, or see for yourself whether she responded in your IM chat. As soon as more than two people are involved in communication, however, the measurement burden begins to grow, and the PC is there to start measuring and reporting on that relationship.

The promise of analytics–data presented in a way that helps you make more money, to put it crudely–is a component of this new publishing world that has the potential to dramatically empower authors and help them make money. On the other hand, like every other aspect of new publishing it’s also potentially disruptive, or at the very least distracting.

In February, author Henry Melton noted that after he wrote a couple of iPad-related posts his site traffic jumped considerably, and coincidentally he sold more ebooks. But while he knows there might be a correlation that’s worth further experimenting (and data collection), his heart’s not into it as a writer. Heck, he doesn’t even want to deal with being on a social network when he writes:

I can’t understand how other writers can be bubbly and personable every day on Twitter and Facebook and whatever other social networking fad is trending today, and at the same time, get their writing done. For the past month I’ve been deep into a new first draft novel, and my social interactions have been suffering. My priorities put the new writing first, and the marketing aspects of the job second. That may be a bad thing.

That power for analytics to distract one from productivity is something Jonah Lehrer commented on just a few weeks ago. His focus was on personal relationships, particularly how the human brain seems wired to organize groups into hierarchies and then to constantly take a measure of one’s own status; he suggests that social network websites overstimulate this part of the brain by first making your social group much larger than what’s historically been the norm (never mind that we may not consider Facebook friends real friends; I think what he’s suggesting is even pseudo-friends may figure into the primal hierarchy-sorting behavior), and then by providing feedback–aka analytics–on their actions as they relate to you.

I thought of Lehrer’s primates-and-hierarchies post when I stumbled across Supernormal Stimuli earlier this week, a new book that argues that animal brains seem to have evolved to be attracted to outsized experiences and data inputs. It’s why we like really fatty or sweet foods, why we’re drawn to hypersexualized entertainment (porn), and–seriously–why birds prefer crude, over-exaggerated fake eggs to real ones.

Both Lehrer’s post and Supernormal Stimuli put me in mind of the kind of infoporn I’m discussing here. After all, the promise that you’ll be able to have an instant macro-view of how the world interacts with your or your content is incredibly appealing, even if it’s almost certainly an unbearable data load for any one person to handle even after a PC does the crunching and chart-building.

Even so, the data is too useful to ignore, and it will keep coming. It may also become as important a part of future publishing contracts as current obsessions with copyright protection and the carving up of rights into different distribution channels, according to Clive Rich, a lawyer with experience in the music industry who spoke at a publishing conference in London last week.

Rich’s argument is that it’s quickly becoming impossible for an author to exert much meaningful control over all the ways a book is sold. In one example, he notes that the practice of “unbundling” or selling a book piecemeal might become a market reality. Another example he gives is that it may become too expensive or time-consuming to negotiate approval over every licensing or business deal in a market with rapidly proliferating distribution channels. (Imagine in a few years: a publisher might try to sell an author’s book on three or four mobile platforms, as stand-alone mobile apps, as fodder for subscription-based online services, and as elements in one-off anthologies created by consumers at the point of sale, all in addition to traditional print copies.)

Rich thinks the trade-off for an author, other than potentially more sales, is that he can demand greater transparency into the business data–analytics, in other words. Here’s how he’s paraphrased in the Publishing Perspectives summary of his presentation:

Transparency is the pay off. Rather than a royalty statement every month, a “realistic objective” for authors might be to get notice of any deals and, in so far as publishers are receiving reports from a distributor, monthly or even weekly reports on consumer purchases and other activity.

[...]

There could be reports on number of users, hits, how many times an application is downloaded, average dwell times, or number of units sold,” Rich said.

[...]

As authors develop conversations with their readers (via blogging and social media) the digital service provider can collect information, which may then be used for more conversations and to up-sell. “It’s a legitimate area of interest for the author to be able to share in that data; they could send an email about the new book with a call to action.” Authors could collect the data through their own websites.

This also hints at a transition in how publisher contracts may be structured. Advances might be lower, says Rich, but “the contract looks more like a service agreement,” with publishers offering a customizable list of services and related fees instead of taking merely a flat cut of any sale. How much you pay to the publisher will partly be a function of how willing and able you are to deal with the business analytics side of things yourself.

Some published authors are already experimenting with publishing their back catalogues through direct relationships with retailers–Ian McEwan is doing it with Amazon, for example. But most of the news in these early days of digital bookselling has been about determining the right price, or determining if there is just one right price, or arguing over how to split the revenue fairly. It will be interesting to see how the discussion changes once some of the more business-minded writers out there begin to make deep dives into analytics and report back to the rest of us on how it impacts sales, marketing, fanbases, and the act of writing itself.

Some quick conclusions:

• The low transaction cost of communicating directly with readers is a double-edged sword. It can make a positive impact on revenue, but drain resources for producing further work.
• “Infoporn” is perhaps a more accurate term than I realized, in that it can be a sort of supernormal stimulus that the human brain naturally gravitates toward but that can distract from constructive productivity.
• Not every writer is going to want to deal with this, which is closer to the “business” side of writing and publishing than the “art” side. (I’d argue it’s actually its own domain and not inherently business or art, but clearly it will be used in the near future mostly for maximizing revenue.) Publishers will likely provide encompassing services for authors, although perhaps some agents will as well. Ironically, if we continue down the disintermediation path away from publishers and distributors, new third-party services may pop up that sell analytics services to authors. Perhaps a Google Analytics-style service will appear, but Google’s free products are justified by their direct connection to ad placement and sales and aren’t simply good deeds.
• Reader data might replace critical reviews in some conditions, for the same reason it would supplant traditional sales ranking reports: reader data is more granular and can offer more accurate feedback for a writer, including the demographics of his highest-spending readers, his works that are most commented on or shared, or which subsections are most purchased independently of the entire work.
• Analytics might be used to actually shape or help create new works, especially “live” writing or works that are deliberately left unfinished until adequate reader data is collected.

(Photo: pdinnen)

Some publishers–Hachette, for example–want everything; authors and their agents want to divide it up so that they can negotiate more precise, and potentially more profitable, royalties. Here’s how agent Jim Gill of United Artists puts it:

He said while some basic enhancements might be covered by an existing grant of ebook rights, “beyond that we’re talking about very sophisticated products which don’t resemble at all what we’d all understand to be ‘a book’ licensed under a volume-rights agreement”. Gill added United Agents would “no sooner naturally sell those rights to a book publisher than we’d sell them film rights.”

I’ve grown increasingly less convinced that existing publishing cabals are capable of being leaders in yet-to-be-developed digital publishing platforms or formats.

If the history of commerce on the Internet is at all predictive, then we probably have a good ten years before big publishers bring the right big guns to the fight and suck up the majority of the market. That leaves a lot of time for disruptive newcomers to transform the marketplace significantly enough that they emerge as permanent and powerful market leaders. See: Amazon this past decade.

Plenty of authors don’t want to worry about the business side of writing and publishing, which is why agents and publishers exist of course. But I’d caution any writer to hold as tightly to undefined rights as possible and to keep it out of a publisher’s hands–not so you can negotiate higher royalties down the line, but so you can experiment rapidly with new digital distribution methods without being hampered by slow-to-react corporations.

“Agents and publishers grapple over ‘enhanced’ e-book rights” [The Bookseller]

(Photo: einalem)

Penguin Books’ CEO John Makinson gave a presentation in London today where he demonstrated some books/applications–I’m not sure what you’d call them technically–that Penguin plans to sell on the iBook store when the iPad launches later this month. Penguin is doing some pretty inventive stuff with its content, judging by these demos, and I think it points a clear path toward how publishers can provide new offerings that printed books can’t match.

Included in the demo:

- A children’s book that includes interactive activities for the reader: at one point, the child may be asked to help the main character color in a picture before swiping to the next page of the story.

- A reference book based on DK’s The Concise Human Body, where users can tap illustrations to zoom in for a detailed view, then tap again to transition to animated 3D models.

- Networked, community-driven editions of books from the Vampire Academy series, where a reader can both read the book and interact with other readers.

- Travel books that allow readers to develop itineraries and make use of interactive maps.

- An astronomy book that uses GPS and the iPad’s motion sensor to display constellations that match up with the sky above you.

It’s all quite impressive–I especially like the Vampire Academy books, which allow you to read the book traditionally but also extend your level of interaction through a built-in, attractive social network interface.

Makinson suggests that the ePub format can’t handle some of the more advanced content they’ve come up with, so the publisher is planning on releasing apps in many cases. I think this is one area where publishers can claim a huge amount of revenue in the digital book marketplace; it’s a lot harder for an independent or writer to develop a high-concept app than it is to self-publish a “traditional” ebook, and I suspect customers will gladly pay significant amounts of money for books that do more than just display text.

“First Look: How Penguin Will Reinvent Books With iPad” [Moconews.net]

When it comes to ebook pricing, I’ve changed my position on the matter almost weekly; sometimes I side with publishers, sometimes with retailers, sometimes with consumers. But I think this week I may have finally realized something that forces me into a more permanent point of view on the matter. It’s this:

Most publishers, in fact, are trying to intentionally slow the uptake of ebooks by consumers. I think that’s what the whole pricing issue is really about–driving away customers as much as possible, because ebooks don’t easily fit into the existing business model of the average publisher.

Last week, an industry insider circulated talking points among publishing types, instructing them on how to frame the debate in the media in order to convince consumers to accept higher ebook prices. This in itself is offensive–if your approach to innovation is to act like a political group, and to deliberately strategize how to abuse language so that you can confuse the issue, you’re sending a clear message that you don’t want to have an honest conversation with your customers.

In response, I posted a piece on Consumerist.com that explains the issue in plain language for publishers: if you want to raise prices, make the ebook worth the price. It’s that simple. Add value, raise the price.

I also pointed out four things that publishers should take under consideration immediately, instead of memorizing talking points:

• Stop calling consumers cheap; they want fair value.
• Stop hiding behind industry inefficiencies. Innovate.
• Stop asking consumers to trust you; demonstrate that you want the ebook market to grow, or be honest and admit that you don’t.
• Stop saying lower prices will destroy author incomes and modern culture; it derails any meaningful discussion.

Most complaints you read from publishers commit at least one of the above four sins. Why, take a look at this email I received from a publisher earlier this week when I suggested that she might sell more copies of a novella (a novella!) if she would price the Kindle version lower than $10 on Amazon:

What I think consumers don’t understand is there is still a decent amount of cost & time we as publishers have to put in to offer a book on Kindle (or B&N, etc.)…So, it wouldn’t be fair to us or the author to charge much lower. All publishers struggle to make ends meet and the majority of our authors certainly aren’t making a living off their book royalties, so for this reason I don’t think we can discount books — print or ebooks — any further.

Look at that: she implies Kindle customers are being cheap (as opposed to asking for fair value), she blames the industry for barely being profitable as it is, and she says authors won’t be able to make a living. Three in one paragraph!

So I finally get it. When publishers say they want to maintain a competitive marketplace, or they don’t want ebooks to cannibalize print sales, or they need to recoup the cost of publishing, what they’re really saying is simply: we want to make sure ebooks don’t take off, because we have no idea how to make that work within our current business model and we’re reluctant to try to innovate.

What they’re not saying is that they’re taking authors or readers into consideration. There may be a more profitable model out there for publishers and authors–one that includes lower prices for consumerst, in fact–but it won’t be discovered by one of the existing big companies. And the next time you read a publisher’s complaints about ebook pricing, make sure you’re not just being fed talking points.

“Consumerist: If publishers want more money for e-books, they should offer something worthy of the price” [Consumerist]

RELATED
Read more comments on this topic at the following two posts:
“Consumerist: If publishers want more money for e-books, they should offer something worthy of the price” [Teleread]
“Book Publishers Circulating ‘Talking Points’ To Counter Arguments That Ebook Prices Need To Go Lower” [techdirt]

(Money photo by aresauburn™)

Two of the best explanations I’ve found come from published writers who have an obvious interest in what Amazon and publishers end up doing:

Read “Amazon, Macmillan: an outsider’s guide to the fight” by Charles Stross

Read “Why my books are no longer for sale via Amazon” by Tobias Buckell

Bonus! Read “Kindle Numbers: Traditional Publishing Vs. Self Publishing” by Joe Konrath for an alternate take on earning money from ebooks if you’re a midlist writer.

Set aside 10-15 minutes and read these two (or three) guys for some great insights, for example on Amazon’s reasons for holding to the $10 price point (hint: it’s not really for our benefit), on how much it costs to publish a high quality ebook, and on how to price more efficiently to take advantage of what different customers are actually willing to pay (hardcore fans are usually willing to give more support to their favorite authors).

This post originally appeared on Kindlerama.

(Photo: kretyen)

To test it, I shipped an out-of-print book from my library and paid for only the most basic, nondestructive scanning service. (You can drop the per page cost to 8 cents if you don’t ask for the book back.) Davide Bianchini, the co-founder of Blue Leaf, says that they use a custom built overhead photo-based scanner, as well as an industrial page-fed scanner for the cheaper, book-gets-destroyed option.

After ordering it and paying via PayPal, I bought a padded envelope and shipped the book via media mail. Eight days later I received an email with a link where I could download the files, and two days after that the physical copy of the book was back in my possession via USPS Priority Mail.

As for cost, I spent just under $29, including shipping, for one 288-page hardcover. That should make it clear that the service isn’t being positioned as an alternative to buying e-books from publishers; it seems more suitable to the rare or out of print titles in your library (or for authors with out of print books they’d like to sell digitally–more on that below).

You should also know that Blue Leaf raised its prices since Teleread’s first mention. The base fee is now $17.95, and the per page fee is 5 cents. If I repeated this experiment today, the total cost would be $33.91.

The company offers a menu of additional-fee services: if you want a text-to-speech file, a Kindle-ready file, or a backup on disc, you can buy it separately. To provide these additional services, the company maintains backups of the original scans for at least six months. If you’re not keen on the company keeping a backup copy, you might want to check first; Bianchini says that they “usually comply” with archival opt-out requests.

As far as quality goes, you can see for yourself. Below are portions of two pages from the PDF file Blue Leaf sent to me. The book I sent included photos and maps, so I’ve included one of those pages as well. (Although this is in greyscale, color scanning is offered).

Click the images to view full-size.

And here are the results of the OCR process.

You can see that mixed language texts are problematic for Blue Leaf’s OCR software. Bianchini says the software can recognize 186 different languages, but it has problems if you combine them. The usual suspects cause trouble–things like diphthongs and accented vowels. Bianchini says that they’re looking into improvements to the OCR engine, but for now you can expect good results with single-language texts, and not so good results with the random foreign word or character.

Skewing remains a problem, although this certainly isn’t unique to Blue Leaf. I found one page within the file that was unreadable because it was so distorted, so I contacted customer service and asked them to investigate. I was concerned that I’d have to send the book back for re-scanning, but they were able to correct the problematic page using their archival copy and return a corrected file in less than 24 hours.

Before going this route you should be aware of two other things:

And finally, if you’re an author with out of print books that you want to convert into a print on demand template, Blue Leaf offers a “publisher ready” service for $16. That gets you a formatted and cleaned up PDF file with standardized margins, embedded fonts, and other adjustments required by POD services like Lulu.com. However, it won’t correct “processing artifacts such as page skew,” notes Bianchini. I didn’t test the service.

Blue Leaf Book Scanning

This review first appeared on Teleread.org.

(Photo: UnfoldedOrigami)

The average time spent reading in the U.S. is 7.1 hours a week, says L.E.K. Ereader owners, however, average nearly 2 1/2 times that at 18.2 hours per week. Over a third of those extra books are considered “incremental,” meaning they wouldn’t have been read otherwise.

The study compares media consumption across all content channels, including TV (still the king), movies, music, and Internet. But the big news of the study is just how voracious ereader owners seem to be. Why? It seems to come down to these three benefits:

• Affordability – Ebooks are cheaper than printed books, and most people are on restricted budgets in this economy. One of the big media/marketing angles when the Kindle launched was that it would save the owner money over time. Although that may not be exactly accurate, the current ecosystem for ebooks lets a consumer spend less per book. You can stretch your book budget with an ereader.
   
• Discovery – L.E.K. is guessing at this one, based largely on the fact that many respondents said they felt there was a better selection of ebooks compared to other retail channels. I agree with L.E.K. that what they’re probably describing is the ability for ebook retailers to customize their inventory pages based on your past purchases and likes. I’d probably buy more books at a bookstore if there were a shelf up at the front that had titles hand-picked to appeal to my interests.
   
• Accessibility – If I’m using a Kindle or an iPhone or iPod Touch, I can finish a book at three in the morning and immediately purchase the next in the series, without leaving my bed or sofa. Hell, it’s even easier than ordering a movie through my Xbox or cable box. Here’s a real world example: two weeks ago, I was reading a preview on the subway on my way to a meeting, and I bought the book as I came up to street level and was walking down the sidewalk. It was a real purchase for the publisher, but practically an afterthought for me as far as fitting “shopping” into that day’s busy schedule.
   

“Hidden Opportunities” [L.E.K. Consulting via MobileRead]

(Photo: unfoldedorigami)

“A settlement isn’t the right way to settle this.”

New York Law School Associate Professor James Grimmelmann, who remained a largely non-partisan outside observer (although he has stated he thinks the settlement should be approved, with modifications), pointed out that a class-action lawsuit isn’t the right way to determine an issue like fair use under copyright law. It needs to be addressed by the government and not through private negotiations, he said, because it has huge societal implications.

Grimmelmann also pointed out that if the settlement goes through, it’s likely Google will emerge with a huge market advantage over any potential competitors, which may negatively impact any healthy competition in the marketplace.

Paul Aiken, executive director of the Authors Guild and a lawyer, argued that the risk of losing the lawsuit was too great: if the courts found Google’s scanning to fall under fair use–as Grimmelman and at least one other legal expert think it could–then others would copy Google’s scanning project. “In our view,” he told the hostile crowd, “It would be catastropic.”

Grimmelman responded that the proposed settlement wasn’t the only valid solution, and that there could have been other paths to a compromise.

“The settlement is overreaching, and probably untenable.”

Lynn Chu, an attorney, author, and book agent, was the most vocal opponent of the settlement, calling it an “outrageously bad deal as a financial matter” for writers and a “typical entertainment industry scam.” At one point she implied that the Authors Guild had been misled by incompetent legal counsel, which not surprisingly seemed to anger Aiken.

Chu pointed out that the business model proposed by the settlement has nothing to do with the original lawsuit, which was solely about fair use. “You glued a business contract to a waiver,” she told Aiken, and accused the Authors Guild of appointing itself as an agent to the world’s authors.

She also criticized the proposed Book Rights Registry, which is sort of an ASCAP for authors appearing in Google Book Search, noting that it would help Google shift costs over to authors by forcing authors to take care of administrative and publishing tasks on their own dime.

“[The settlement] probably won’t survive an appeal,” she told the crowd, a sentiment that Grimmelmann seemed to agree with. Still, she cautioned, “There’s no reason to be apathetic.”

“The settlement isn’t really author-friendly at its core.”

Edward Hasbrouck of the NWU pointed out a worst-case scenario that could happen to an author under the terms of the settlement: You have a book included in the database, but your ex-publisher claims that because it has authorized a print-on-demand version of the book it still owns the rights, so you and the publisher agree to binding arbitration and you lose. Since the arbitration is legally enforceable, you will have permanently lost your claim of ownership over the digital copy in Google’s database.

Chu noted that Google reserves the right to audit the Book Rights Registry, but that the favor isn’t returned because Google claims trade secrets will be compromised. She also noted that authors can make their own deals with Google and don’t need to rely on the settlement.

Note: the Science Fiction & Fantasy Writers of America hosted an online panel discussion this morning. You can read through it at http://sfwa.org/online-google-settlement-panel/.

(Photo: Robert Couse-Baker)

A lot of authors are having trouble deciding whether the settlement is good or bad for them, probably because it’s a little of both when you get right down to it. I tend to side with Google, but then, I tend to think that making every. single. thing. in. the. world. searchable is a Good Thing and should be done, and I have no faith it will happen in the next 20 years without a for-profit corporation getting involved. (And believe me, I am no sycophant of big business.)

I’ll be curious to see what people say at the workshop. I have my own opinions about what should happen here (and it boils down to: authors, don’t forget that you also have a duty to the world, same as any citizen), but I’m saving them until after I see what people say today. At least one of the speakers should be non-partisan, but I have a suspicion things will get heated. We’ll see.

(Photo: Robert Couse-Baker)