Waterstones at a Watershed

In the past few weeks we have seen a number of announcements coming from James Daunt and the new management team at Waterstones and all of this has been looked at in isolaton. Looking at the bigger picture we begin to see what can be interpreted as Waterstones new strategy or part of it anyway. How much more has to be unveiled will be interesting but what is becoming clear is a distinct repositioning of the UK's leading book chain. Scrapping the 3 for 2 offer is widely seen as long overdue and to be honest it was a promotion which largely ignored smaller publishers. It appears James Daunt is keen to allow store managers a little more autonomy in promoting strong selling titles within their stores. This is great news for smaller publishers who often have titles which sell 100's of copies in stores but have not been able to capitalise on that success of find a way of sharing that with the store through a more organised system of ordering. James Daunt also wants to introduce tiered or banded pricing for titles, making their most popular books more competitive with stores selling at large discounts. It appears we are being drip fed the strategy by Mr Daunt and this is a wise move, allowing the industry to come to terms with this new direction. Daunt knows the importance played by the large publishing houses but clearly recognises that for too long they have been driving publishing and publishing retailing in the direction they wish to go. The emergence of digital has dictated that book retailers can no longer allow themselves to be herded in the direction these publishers wish to drive them. The announcement (long overdue) of Waterstones dedicated eReader is much welcomed and hopefully will allow publishers to work closely with them to develop ways to encourage a greater interaction between paper and digital books. Publishers need to work with book stores to support them with their digital content sales. Integration of devices, eBooks and physical stores is long overdue. Finding a way for this to work more seamless is a challenge for publishing and the likes Mr Daunt. Publishers can start to look at new promotions such as linked sales tying eBooks with physical books as well as making content available to buy in-store. Waterstones are in the perfect position to exploit and begin this dialogue.

Playground

No romanticism. This was the old country and I’m not talking about Ireland or some fairy tale shit like that. This was East London. You could smell the air; fuck me, you could see the air. It was thick with chemicals blowing down the River Lea like a cloud of invisible death. Paint from Matchbox, paint from Berger paints, chemicals and all sorts of shit, like toxins and god knows what, from a myriad of companies that regularly flushed their waste into the river. This was our playground. On a baking hot summer’s day you’d walk in the long grass, being stung to fuck by nettles and you could smell that rich concoction of pollution. But along the river there seemed to be a connection somehow with the country. Not that we ever saw the country, but it felt like it. The heat of the sun somehow seemed magnified, maybe it was the water or maybe it bounced of the mishmash of factories that lined the edge, vying for space and offering the only employment you were likely to see...if you were lucky. Some of the buildings were already ghosts, pale imitations of a former glory. Broken windows letting light into the darkness within. They became the hunting grounds, the kingdoms and palaces of our dreams...of our imagination. It was either here or the bomb sites from world war two. They still existed 30 years after the Nazis surrendered and the Japanese paid the price for not surrendering quickly enough. Burrowed out holes in the ground, brick walls still standing somehow, more through dogged stubbornness. Like yellowed teeth in an old man refusing to have dentures. These houses ran the back of the park. All you had to do was jump the railings and a new world opened up. It was an adventure for kids ignorant to the death and destruction that caused these labyrinthine burrows of connecting cellars and partially collapsed houses. Sometimes you would find stuff. The odd coin, a penny or a bunch of newspapers or letters. Lives ripped from this world in a flaming inferno of violence dropping from the sky onto the shit hole houses. Many said Hitler done us a favour. He at least enforced some modernisation on the area. Now it’s the Olympics, but god help us if we actually see or talk to anyone from the area. Fuck’s sake they won’t even put the marathon route through East London for the shame of exposing the area to the world. We had freedom though. Only ourselves to care about. No paranoia about perverts or non-existent child killers. We ran the playground the full length and breadth of where our legs would take us without a care for boundaries or private property. What was private anyway? It was our world. Shitty it may have been but it was ours and in a way we was proud of it. Fools to ourselves. Escape came in our imaginations and if that wouldn’t do the trick there was always a pint or two of larger down at the social club – even though we were kids. We fought like soldiers on school trips – not that there was many, but we stood no shit from anyone. And we fought like warriors among ourselves. Sometimes all you could do was fight. Pain the constant reminder that you was alive. This was my playground and I called it home...I still do.

Is the eBook market reaching maturity in the UK?

Something is happening in the world of publishing as it appears the major publishers are finally reacting to the aggressive pricing of eBooks at Amazon by self published authors and independent publishers. This weeks top 20 only 8 titles prepared to take titles over £1. This is great for readers but a worrying sign for smaller publishers and independent authors who have led the way with pricing on eBooks so far. Karin Slaughter’s eBook exclusive ‘The Unremarkable Heart’ is priced at 44p and publishers Cornerstone is clearly going to make a killing. The good news here though is that entrepreneurial authors such as Louise Voss and Mark Edwards continue to give the big boys a bloody nose with their higher priced independent published novels ‘Catch Your Death’ and ‘Killing Cupid’. This is undoubtedly encouraging news for authors and smaller publishers. At the start of this year we ran a trail with pricing our books at under a £ and under a $ at Amazon and while initially successful we simply were not generating the income form the sales to make the venture worthwhile after Amazon took their 70% for the pleasure of hosting and selling. Being left with 30% of under a £ (or $) to distribute is not an enjoyable experience for the publisher or the author.

There is an interesting juxtaposition faced by independent publishers and authors and that clearly is that unless you are achieving sales in the 000’s it is commercial suicide to under-price. Our trial has ended and we have set our eBooks at £2.08 and $2.99 in the hope of maintaining and increasing sales through a price differential. The market is currently flooded with books under a £ and there are some truly excellent titles their from major publishers and independents as well as self-published authors. However, eBook readers are showing in response that they are prepared to view the playing field in a far more open way than they would if they were in a book store. Mark Edwards and Louise Voss have clearly shown that if pitched right eBooks can become viral. Something which is virtually impossible in the bricks and mortar world of traditional publishing.

We may regret increasing our eBook prices but there has to become a point where the eBook reading audience has reached maturity and become comfortable with buying new titles instead of expecting to download them free or having a less pleasurable experience through downloading pirated eBooks on torrents (along with a lot of other hidden viruses, trojans and malware). I think we have passed that point. Clearly readers are prepared to consume eBooks and to do so as voraciously as they do their paper counterparts, so the market needs to establish the true worth of an eBook without alienating this growing sector of consumers.  We must be aware the large publishers can undercut any price the independents care to set, so my thinking is that we should now be leading the way with pricing which actually reflect a serious business model for eBooks. Giving away 70% to Amazon or any other store is not a true working model for independents and I dare say not for larger publishers either (Though I would be surprised if Cornerstone are surrendering 70% rrp). By the same token pricing eBooks at a level close to the paper version is insanity and a reflection of nothing more than avarice by the publisher.

I think the market can bear a pricing model which is more consistent across the board. This would be beneficial all round and allow authors such as Voss and Edwards to truly financially benefit form their fantastic sales. I think eBooks will settle at around £2.99 as the market matures, this may be a year or two away but we have to be prepared to test boundaries and sometimes react before the larger publishers.

The Tipping Point

 

Waterstones will hopefully have a new dawn and flourish on the high street but so much needs to be done to redress many of the inherent issues plaguing the industry from over-ordering through to distribution and needless third party handling of stock, which lead to delay, add to cost and reduce profits for stores, authors and publishers. eBooks are still a part of the equation and a very important part which allows both authors and publishers freedom to cut out some of the factors which have seen physical book stores placed under threat.

Publishers want to support book stores but elements of the current business model need to change. Yesterday I received a potential order by a major high street chain for 500 copies of a book at a 60% discount. This book will be ordered through a third party distributor (let's say Gardners) who will take anywhere between 20 and 30% for doing nothing more than acting as a middleman, delaying the order to fulfilment process, adding to the handling and potential damage of stock. Of course if the store placing the order continues with this process they will want to ensure they make a profit on the order, if our normal wholesale rate applied this would leave the chain with little profit to make the venture worthwhile. Hence the top line addition of a further 30+%. These books are given to the chain on a sale or return basis. Here is the dilemma. Each book sells at £7.99 rrp, we use POD and have a high print cost per unit, say £3. £7.99 -60% = £3.20. Leaving us 20pence per copy to design, promote, pay royalties, pay ourselves and any other extraneous costs and still run the risk of having returns which we have to then pay back and decide what to do with the returned stock. We can opt for a larger print run to reduce print costs but this will not be a significant reduction for a relatively small run of 500.

If the chain orders direct from our printer/distributor and has the books shipped direct they can save the middleman distribution costs increase their own profit line through increased wholesale discount % and make the order profitable for us. Will they? The answer is probably no. So, for a small publisher such as Caffeine Nights we potentially lose the opportunity see one of our titles in stores across the country at a sustainable level.

eBooks simply do not press these problems. So who will win out, eBooks or physical books? If this current business model is not changed the answer is sadly very, very simple and inevitable.

World eReading Congress – So Cordially Invited...

Well in the end I was very cordially invited to join the World eReading Congress by the event organisers and help host the opening sessions on Tuesday 10th May with BBC’s Technology Correspondent, Maggie Philbin chairing the event. In fact it was a surreal moment for me to be introduced by Maggie.

The event itself cannot be criticised for its lack of scope, quite the opposite really, as the world of digital publishing came together from newspapers, magazines and books. Sometimes this mix was a little frustrating for the delegates who represented each of these sectors as it was also clearly obvious at times when they tuned out. Having said that, 2½ days away from the office was a big ‘ask’ of the delegates with such a crammed agenda.

In trying to offer something for everyone it could be argued that the organisers ran the risk of delivering nothing of substance to each of these disparate sectors. The interesting thing about digital publishing in all its forms is that inevitably there was enough cross-pollination to keep most delegates happy that they were either learning something which could be applied to their own sector or which could be adapted.

Events such as this rely on innovation, thought leadership, and discussion to provide a basis to determine success and for delegate to leave thinking their investment (anyone who read my previous blog about this event will know it wasn’t cheap) was well spent. There can be no denying that the event attracted industry leaders from each sector represented and in this sense the congress delivered. The CEO of Harper Collins, Victoria Barnsley OBE and Deputy CEO of Random House, Ian Hudson stepping up to the lectern to deliver some thought leadership from the world of books on the shape of digital publishing today.

Victoria Barnsley’s offered little new during her presentation and no real insight into Harper Collins approach to eBooks. She drew attention to Amanda Hocking and her independent approach to selling over 400,000 eBooks after numerous rejections from an industry which didn’t care about her or her writing until she became financially fuckable by the big boys. Barnsley argued that Hocking chose a major publisher over Amazon, who had joined the rush to snap Hocking up, because it was the right alternative to go with a traditional publisher offering the widest possible platform for distribution. I think whatever the outcome of Hockings career; Hocking will be having the last laugh. Victoria Barnsley closed with the comment that “We may not be able to control our destiny but we do have the means to influence it.” Here I agree.

Ian Hudson talked about our love affair with books and spoke of Cupid and emoted about our passion and romance with the printed word, and that it did not matter if that word was digitally printed. The main object was to connect with readers. At the romantic beating heart of Hudson’s address was a series of industry stats which reflected those of Victoria Barnsley. Each showing a huge year on year growth – no surprise here as we are starting from ground zero and most stats are going to show a spectacular rise and this will continue for some time. Both Barnsley and Hudson talked about authors going it alone with self-publishing and both gave examples in their own way, why going it alone doesn’t work. I detected an underlying sense of worry in Hudson and Barnsley, even though it was shrugged off.

The main concern for publishing though was largely ignored and that is the fall of paper book sales. There is a correlation to the rise in digital sales but it is not enough to account for the slump. Of course we are in the long tail of a global recession and leisure spending is decreasing but with two speakers from the largest publishing houses in the UK it would have been nice for a little more insight.

The content of the day seemed hell bent on not rocking the boat until Cliff Conneighton from Elastic Path Software presented. Conneighton presented the liveliest and one of the most thought provoking session of the day and actually threw out challenging questions to the gathered delegates. Cliff told us to forget everything we knew or thought we knew about digital publishing as basically we knew nothing anyway. This brought a smile to my lips but many delegates sat stoney faced, some even scribbled this down, either they had no concept of irony or humour. But at the heart of Conneighton’s statement was some truth. We are stepping into unknown territory and writing the rule book as we go.

Cliff Conneighton shared his 30 minutes with CEO of Lulu, Bob Young, a man who could impersonate Woody Allen with ease. Young brought the same sense of awkwardness to his presentation that watching a Woody Allen film would bring when you hope to watch a comedy on par with the Sleeper and get Match Point instead. Bob had a presentation prepared and decided not to use it for reasons which remain unknown. Instead he decided to wing it. Consequently there was no structure to Bob’s 15 minutes. I won’t guild the time by calling it a presentation. The upshot was that Lulu is not a publisher; Mr Young obviously feels this exonerates him from publishing some of the shocking books that grace his platform. I do wonder if the irony of ‘publishing a lulu’ is lost on many that use the platform. Personally, I actually think Lulu is doing a great service and providing a platform which gives access to anyone to become published, which is fantastic in this new publishing democracy. Bob imparted the knowledge that self-publishing including his Lulu platform accounted for about £500m global sales against £3.2bn for ‘traditional’ publishing, the inference being that platforms such as his were not a threat to Harper Collins or Random House. Lulu will be offering apps to their customers/publishers as well as eBooks, Paper books CD’s photo books etc. Never underestimate the small guy with specs. The world is a more colourful place thanks to Lulu and Mr Bob Young. I just wish we knew what was in that original presentation.

The other notable presentation of the morning was Alex Ingram from Waterstones. Ingram, eBooks and Development buyer was clearly more comfortable talking about Waterstones eBook strategy than the company’s at present uncertain future. Waterstones own eBook offering is supported by Sony and Elonex readers and one ponders the question if a new owner may back a more aggressive approach to the market to take on Amazon, at least in the UK, by announcing a dedicated Waterstones reader linked to its eBookstore. Amazon’s predicted announcement of a hybrid tablet, which has the best elements of the Kindle with an Android OS, could put further strain on the chain if Waterstones do not respond or pre-empt with a strategy to reposition its place in the eBook market.

A welcome discussion from Paul Gathercole of Universal Music on how publishing can learn from the mistakes of the music industry was the only time during the day when piracy was broached apart from privately during breaks at lunch and networking. Gathercole told how the music industry alienated itself by over-reacting and becoming heavy-handed with individuals as it panicked to find a solution to piracy once it had closed Napster. In fact, by closing Napster the industry had moved piracy from an area where it could easily trace each pirate using a single server to a massive underground network hiding behind more sophisticated hardware and software. As we contemplate Spotify for books or Bookify its clear that the challenges facing the industry are many, how we react, as the music industry has shown, is important because one wrong move can lead to a multitude of problems. Gathercole put it that the music industry thought that by slaying Napster it has killed the beast but in its place a many headed monster rose.

I attended the congress with a personal agenda and hoped to be given time during the Q&A sessions to raise some of the issues I feel are relevant in the industry. A selfish agenda admittedly, but one I still felt needed airing. Areas such as the imminent arrival of ePub 3, media rich content vs text, DRM, library eBooks and loans, Amazon and loans, mobile phone publishing, cloud computing, digital publishing and the old business model, social media, the Hargeaves report and the threat posed by literary agents becoming publishers were not even mentioned, or if they were it was nothing more than a passing comment. Sadly, each of the morning’s five sessions resulted in only one single ten minute opportunity to address all of the speakers on the content of their presentations and to try to touch on anything remotely contentious. Far too short a time than do anything but rub the veneer, let alone scratch the surface of the impact of digital publishing.

The main criticism of the Congress, as mentioned earlier is that the ambition of the event over-reached its capabilities to deliver anything but a snapshot of the industry, and by trying to cover too much content, too little depth was achieved. Ambition should not be criticised if the event organisers learn from this inaugural event. At least a third of the presentations could be dropped in favour of extended Q&A’s and possibly a congress which was not trying to be all things to all people. In its bid to attract as many industry elements as possible we ended up with a mongrel of an event. Maybe by hosting separate events aimed at each sector, such as a World eBook Congress, a World eMagazine Congress, and a World ePublishing Congress, the focus for specific industry questions and innovation could be directed more easily, giving more time and allowing for more scope for each sector. Nothing would stop a book publisher from attending an eMagazine Congress, nor vice versa.

One other presentation of note caught my attention and that was ‘Maximising success with web and mobile publishing from Richard Stephenson, CEO of Yudu media. Richard had some pretty impressive statistics concerning the loyalty of subscribers to digital magazines published on the Yudu platform. Some 64% renew through an automatic renewal system and talked of the importance of cross platform access and content providers developing content with different platforms in mind. One of the areas of interest for publishers must be the container app, especially for building brand loyalty. If publishers believe that product is more important than brand, rather than ‘as important’, then a container app may just be the tool to persuade them of the importance of developing a strong brand with great product.

Another important point given during the congress was a reminder of producing good metadata. This should be a given but sometimes it’s easy to neglect the importance of this tedious job. In fact one of the quotes of the day was “Metadata in the digital arena is going to replace the bookseller in the physical arena.” I hope the industry is actually planning to support the physical world more than just placing reliance on metadata as a substitute to recoup physical losses from the digital world.

I also think a lot of unnecessary energy is going to be spent on determining a winner in the battle of the eBook readers. A discussion at the end of Tuesday while amusing only highlighted the fact that some people like red wine and some people like white and some people don’t like wine at all. As with the music industry there is room from more than one format. Fiction readers will see the benefits of both Amazon’s Kindle and the bells and whistles of the multi-media offered through tablets, non-fiction and magazine/newspaper readers will benefit from ePub3 and the burgeoning tablet market. So this face-off on finding a winner is a pointless exercise. Readers will migrate to their chosen formats and there is plenty of room in the market for both.

The event had strong delegate representation from Europe, especially from the newspaper and magazine sector; at times this seemed to manifest itself with a very quiet and subdued audience unwilling to engage with the keynote speakers or presenters. Yet in contradiction to this, most questions posed came from people with strong European accents, so maybe it was the British who were reserved and quiet.
On the whole the World eReading Congress did deliver in some areas and I am sure that the organisers will make improvements moving forward. I look forward to seeing how this event develops.

ePub3 - Media rich has to add consumer value

The arrival of ePub 3 will undoubtedly see a rush from publishers to make maximum use of its whistles and bells. Will fiction publishers be falling over themselves to produce media rich content? While I can see the temptation to add video author interviews or even authors reading chapters, my concern will be adding multi-media content just because we can, not because it is actually needed or adds anything to the publication. Platforms such as Vook have been around for a while and have set an entry level for media-rich eBooks, with ePub 3 opening the door too many more of us there could be a similar rush to provide content similar to the rush to provide eBook apps. Everyone is crazy to do them but who the heck is actually buying them.

At present the embryonic market for plain old text eBooks is slowly taking off and establishing itself in the minds of the consumer. I think the next area of development should be expanding that understanding, association and eCommerce platform, to be more accessible in our stores in the high street and not to get carried away with product which will inevitably push the price of eBooks up. I think this step could further alienate a budding market which could if left to embrace eBooks could blossom into a market which could bring a new revenue stream to the high street book shop as well as the Internet.

I am not for one moment suggesting we don’t develop media rich content but what I am saying is that we not in our haste ignore ways to ensure that eBooks not only reach a wider audience but that they sit as comfortably in book shops as their paper brothers and sisters. Stores sell eReaders, why don’t they have digital libraries which consumers can browse and purchase from – maybe even giving the option to buy a linked purchase of the physical paper copy with the digital one?

eBooks and digital publishing is the future but I do wonder if the industry is losing association with its roots in the high street and if, maybe an opportunity is being ignored.

LBF11, ePub 3 and the next big thing?

So the London Book Fair is over for another year and I have to report that it was a far better fair than last year, though that comparison is like telling a man who has just lost his leg that you have been able to sell his shoe. The numbers were back and so was a genuine buzz. The IRC had a constant flow and deals were being negotiated not just in the IRC but also in the many cafes populating Earl’s Court.

But what were the hot topics of the show, what was the headline grabbing advance in publishing? For me there was only one clear evolution and that is still digital, especially the forthcoming arrival of ePub3.0. There were a number of seminars dealing with the development of the platform and fortunately most of them delivered in clear and concise language.

The key benefits for publishers with ePub 3 will be the ability to have multimedia rich eBooks with ePub able to host and stream video and audio content. This will have many clear advantages and open a world of possibilities. My main concern here though is for fiction publishers not to lose site of the fact that content is king and no matter how many fancy videos you incorporate readers still want a good read. We must never lose focus that it is the words which are and always will be the most important aspect of a book be it paper or digital. So, while great it is a tool we must use with caution and creativity. One of the other areas of improvement with ePub 3 is the ability to use Scalable Vector Graphics (SGV) files with greater ease. Though SVG’s have been around since 1999 they have not fitted well with ePub until now. The new version will bring a greater dimension to the graphical layout of ePubs. Clearly one of the big sectors to gain from ePub 3 will be magazines and non-fiction publications both of which can incorporate the two key developments.
Another step forward has been ePub 3.0’s improved metadata which will enhance text to audio features and help define key attributes of titles for better search parameters.

Bill McCoy from the International Digital Publishing Forum (IDPF) gave an excellent presentation which I hope will be made available online.

There still appears to be an element of the gold rush with eBooks and apps, and many companies are clearly cashing in. One stall in the digital zone was selling its CMS app generating system – a cloud based app generator. All you do is upload your files to a predefined template and hey presto...one app. The software was simplicity itself and frankly my hamster could have generated an app using it so bravo to the software designers. Now before you all go rushing off to Google this company (who shall remain nameless) check your bank balance first. I was told that to produce one app using this remarkably simple software would cost...wait for it...£10,000 per book. I am glad I turned down the free offer of a ‘celebration’ sweet as I may well have choked on a mini snicker, though to be fair as I walked away I did have a major chortle. Maybe there are publishers out there desperate enough to jump on the next digital bandwagon but 10k for a crummy app is serious wedge and you are so very not likely to see anywhere near close to a return on that investment.

The next ‘big thing’ is going to be a glut of ‘social media specialists’ promising to elevate your books from the mire to the stratosphere. Two specialist companies were encamped in the digital zone, both of which were actually offering very good advice. Clearly many publishers require help with social media and also with traditional media. I watched amused as a packed seminar filled with publishers and authors alike scribbled in their notepads devouring the nuggets tossed from Gareth Howard of Authoright PR. Gareth talks a lot of sense and while a close observation of the content reveals nothing new or startling it was the response by the eager audience which clearly shows that there is an audience willing to pay handsomely for this sort of expertise. I would not be surprised to see a number of new companies eager and ready to mop up here, it will be interesting to see if the 2012 LBF shows an increase here.

There was the usual strong contingent of companies from China, India and Russia this year being the market focus. Once more there was not much new or startling from these areas. There was a marked reduction in companies selling proprietary eReaders. This may also be a case of a maturing market or one consigned to the dominance of Amazon and Apple in the market.

In summary, the LBF 11 was a success in a very challenging market. There was a palatable air of optimism, who knows if this was real or naive and wishful thinking but it was upbeat, positive and a huge step in the right direction. ePub 3 will launch later this year, July has been mooted but we will wait and see. One of the positives from Bill McCoy was that ePub 3 is an ongoing project and that we are not immediately going to rush to a new ePub 4.0 platform. This will be a genesis which evolves rather than a rewrite of the format, which for publishers, authors, and readers is excellent news.