Tag Archives: ebook distribution

eBook Bundling & Supporting a Diverse Retailer Ecosystem

In a previous blog post about the action at BEA I remarked that, “The hall was alive with e-book and e-commerce solutions and propositions that are really beginning to make sense. The geeks now know enough about the actual business of books to go after some real problems and opportunities.”

It turns out that this was an understatement. The technology community is producing plausible solutions at a terrific rate. I covered Zola Books in a previous post. In this one, we have asked Peter Hudson of BitLit to write a guest blog on his company’s solution to the question of bundling print and eBooks. This turns out to be rather timely as Amazon has recently rolled out their Kindle MatchBook program.

I hope that this will be the first of a number of guest blogs that will bring innovative ideas and programs to the attention of independent presses.

—  Curt Matthews, CEO, Independent Publishers Group.

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Peter Hudson is the Founder and CEO of BitLit. As an entrepreneur he’s been told he sees the world differently, but as a physicist he’s not sure that’s optically possible:

Let me propose two things I feel are true: book publishing and selling benefit from a strong and diverse physical and digital retail landscape, and Amazon’s announcement of Kindle MatchBook has forever etched the expectation of print and digital bundling into readers’ minds.

There has been considerable discussion about Amazon’s reasons for launching MatchBook. A point made by Alastair Horne on FutureBook.net is that MatchBook may be mostly about bringing paper book reading holdouts into the Kindle (rather than, say, Kobo) digital reading ecosystem. It seems reasonable that, as the eReader device market saturates, growth must come from traditionalists rather than book mavens and the e-savvy.

MatchBook may also be a tactic to drive Amazon print sales. Print purchases on Amazon as far back as 1995 are eligible for MatchBook. Even if publisher participation is limited at launch, it’s not a stretch to think by buying a print book on Amazon today, the billing record will make me eligible for a bundled eBook sometime between now and 2041. That’s not an offer that a sales receipt from my local indie can match (pardon the pun).

So, while MatchBook is a wonderfully reader-friendly program, it may cause considerable collateral damage to the diversity of both the digital and physical retail landscape.

Enter BitLit.

BitLit is the solution for publishers who want to offer bundled eBooks to readers regardless of where books are sold or what platform they are destined for. It’s all done through a simple and free smartphone app. Readers register their hard copy by writing their name onto the copyright page and snapping a photo using the BitLit app. Once the reader’s print edition has been recognized and registered through BitLit, they can download a free or discounted eBook edition from BitLit’s secure servers to their reading device of choice such as Kobo, Kindle, iPad, etc.

Bundling is not a new idea. Indeed, many well-known publishers have experimented with bundling in recent years. In the UK, Osprey Publishing offered a free eBook edition with the purchase of a print edition through book retailer Mostly Books, for titles published under the Angry Robot imprint.  The result of Osprey’s bundling was a dramatic increase in print sales.  O’Reilly offers DRM free digital “upgrades” through its members.oreilly.com portal for both print books and eBooks purchased through other retailers. In Canada, publishers such as ECW Press and Coach House Books offer free eBook editions to readers who email in a print edition proof of purchase.

The 2012 Canadian Book Consumer Annual Report from BookNet Canada found that 20% of readers would choose one book over another if one came with a bundled eBook edition. Additionally, a further 12% would pay a slightly higher price for a book if it included a bundled digital edition. These figures may well explain the dramatic increase in print sales seen by Osprey when they offered a free eBook edition with the purchase of an Angry Robot print edition.

Bundling has arrived, and offers publishers a huge potential opportunity to drive sales and re-connect with readers. But it’s critical that bundling is used to strengthen the publishing and bookselling landscape.  BitLit aims to do exactly that.

BitLit has partnered with Independent Publishers Group to allow member publishers to opt in and offer free or discounted bundled eBooks through BitLit to readers, regardless of where they purchased their print edition.  There is no cost to participate.  For more information or to opt into the program, please email Peter Hudson or Lauren Klouda (IPG-distributed publishers).

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3 Big Takeaways from Book Expo America 2013 for Independent Publishers

At the big book convention in New York, we saw old friends and made new ones against the backdrop of one of publishing’s biggest powwows. I also observed some very exciting things happening for the indie publishing community.

There were many more indie presses in attendance than has been the case for the last four years or so. At the IPG booth we had conversations with dozens of very promising publishers who have quite extensive and impressive publication lists. It is clear that an improving economy has brought forward a surge of entrepreneurial energy in the book business. The future is going to be a lot of fun.

The hall was alive with e-book and e-commerce solutions and propositions that are really beginning to make sense. The geeks now know enough about the actual business of books to go after some real problems and opportunities. For instance, a startup called Zola Books has developed a user-friendly way to deal with the issue of “showrooming”—the term we use to describe what happens when a customer at a bricks-and-mortar bookstore looks over the titles on display and then orders a print or e-book copy from a web retailer, often for a lower price. Zola Books gives a bookseller a well-earned piece of the action for its part in making such sales.

It is now clear that the e-book market will not be dominated by just a few huge web retailers. We were approached by 15 new ventures at the show, all offering very favorable terms for publishers and proposing innovative marketing strategies that could really work. By the end of this month, IPG’s e-books will be available through about 75 web retailers, and it’s great to see that many of the smaller ones are growing quickly. This means there will be plenty of healthy competition, no matter what the Department of Justice thinks have been the sins of the past.

These developments add up to a lot of promising opportunities for independent publishers.

IPG at BEA 2013

IPG at BEA 2013

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Information Technology That Works

I have been drawing attention in this blog to new publishing-related software that over-promises and under-delivers: authoring platforms that are not actually going to make anybody into an author; self-publishing programs that will not turn an author into a publisher overnight; social media schemes that really just amount to fraud or deception rather than legitimate publicity.

Ones and Zeros Extending into DistanceThe fact remains that there are some aspects of information technology which are revolutionizing the book business. Not the flashy, public-facing “solutions” I have been complaining about, but rather a quiet back-office capability to receive, broadcast, and interpret data—lots of data—that is making all the difference.

As recently as four or five years ago, even a quite sizable publishing company could get along just fine with a two-person IT department: one person to keep the server going and another to reboot employees’ computers when the things won’t cooperate. That was the case with IPG for many years.

Now, however, IPG employs fourteen highly trained computer specialists who can program, construct databases, write SQL queries, design websites and dashboards, mine data, generate reports, construct interfaces, and oversee highly complex management systems. Most of the time they are working so hard they have smoke coming out of their ears. Here are some of the technological capabilities, becoming ever more vital to the indie publishing community, that these people make possible:

Point-of-Sale Information. We are able to get information from the largest booksellers and wholesalers about the number of copies of each of our titles they have on hand, the number on order, the number on backorder, the number that sold through this week and last week, both by units and by the percentage of copies sold versus the quantity on hand. It used to be that publishers had little idea what was going on in the marketplace in regard to their titles at the store level. We sent them out and just hoped they would not come back. With point-of-sale data, the timing and quantity of reprints can be handled infinitely better than in the past. Access to this data revolutionizes the way publishers run their companies.

Metadata Feeds. Sophisticated publishing operations now send metadata to their major customers. (Metadata is just a term for electronic title data.) We send our data to 350 customers, formatted in ONIX as well as proprietary formats, once a week. Why is this important? We now have about 85,000 available products on our list. We make hundreds of revisions to our title database every week because of price changes, new editions, new forewords, new reviews, and changed statuses which must all be communicated to our customers. Metadata feeds enable the seamless, automated transmission of these changes to our customers’ servers and databases or else we would all go crazy trying to keep the data straight. At this point in the book business, any friction in the system costs everyone dearly.

Data Mining. IPG has a “data warehouse” that has recorded every sale of every title to every customer for many years. This data can be sliced and diced by any combination of hundreds of parameters. A few simple examples: BISAC subject codes, customer type or location or size, book format, and of course quantities sold over any date range. To this information we can add sales histories of comparable titles from other publishers. The big-box retailers—Wal-Mart, Costco, Kmart, and so on—require that we “model” the titles we present to their buyers. That is, we must demonstrate with data that the title we are pitching to them has the right attributes to perform well in their stores for their customers. No data, no sale.

Ebook Conversion and Distribution. IPG now produces hundreds of ebook editions a week. This would not be possible without automated procedures and work flows. Most weeks we send about 200 new files to our thirty-five ebook retailers, which adds up to about 7,000 ebook files with their related metadata. This would be unthinkable without an automated batch-mode delivery system, another information technology innovation.

Years ago, when my wife and I ran a small bookstore next to the Drake Hotel in Chicago, we used to keep track of the inventory on 3” by 5” cards stored in a little metal box. It is hard not to be nostalgic about those simpler times, and perhaps that nostalgia can help us to keep clear in our minds the truth that book publishing is really about intellectual content rather than the latest whiz-bang technology. Books were books back in those days too. Still, the right sort of IT is now indispensable: it enables publishers to reach an ever broadening audience at an ever diminishing cost.

Curt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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Book Distributors in the Age of Electronic Publishing: Part II

This post is the follow-up to the previous, which addressed what distributors do now at a time when printed books still dominate book sales, and will describe the role of distributors as the industry transitions to eBooks.

The advent of the eBook changes everything. Distributors are about to be disintermediated (a fancy way of saying put out of business) along with publishers, and booksellers. Authors will self-publish and sell directly to their readers, eliminating all those parasitic middlemen. Except for Amazon.

Or maybe not. The world of e-everything requires more investment in technology, not less, and distributors once again will be able to pick up the check when indie publishers cannot. And it turns out that the sophisticated IT capacities that distributors have had to develop over the last few years to handle print books at a high level—especially databases that can seamlessly share information in-house and with client publishers and customers—has made the technical challenges of eBooks seem not especially daunting. We are used to shooting metadata and book files all around the book industry, and eBooks are just a subset of that activity.

Also, there are new opportunities for distributors that completely bypass the big e-retailers. IPG’s sales of books directly to consumers—from our own website, through the shopping cart we supply (for free) to our client publishers, to affiliated special interest groups on the internet, and to the thirty-five or so eBook resellers we work with—are growing exponentially. These expanded sales methods, and others not yet thought of, will require new technological investment and innovation, but we are ready and able to provide it.

Moreover, it seems to me, on one essential front the electronic booksellers are highly vulnerable. They have been unable to solve a gigantic problem with their business model, the problem of quality: What is good and what isn’t? Non-professional reviews posted on e-booksellers’ web sites are by now completely compromised, scammed, useless. You cannot fool all of the people all of the time. Last year over a million new titles were “published,” the great majority of them incompetent. How are readers supposed to navigate through this sea of mediocrity?

One of the most important functions of publishers, distributors, and booksellers (book agents and reviewers too) has always been to assure a certain level of quality, not necessarily as high a level as we might want, but at least a baseline far higher than the abysmal standard—in fact the non-existent standard—set by the new electronic vanity presses.

Good distributors are appreciated by their customers almost as much for what they refuse to sell as for what they do sell. IPG takes on a very small percentage of the publishers who apply. We know that weak titles will dilute the sales of strong ones. Satisfied customers come back for more. Does this mean that IPG takes on only large, well established publishers? Certainly not. Some of the best books we handle are published by start-up presses and self-publishers, and over the years IPG has helped many such ventures to grow and prosper.

Traditional booksellers are outraged by the phenomenon called “show rooming.” Customers browse the books in a bookshop and then order what they want from a web bookseller, who gets a free ride because he has paid nothing toward of the expense of providing that highly curated selection of titles. The bookseller’s taste and experience go unrewarded.

Many electronic booksellers, however, don’t think they have any obligation to their customers to separate the sheep from the goats. Since the customers who buy books from them almost always come to their sites already knowing what they want, they are free riding on the publishing professionals who do provide this essential service.

If all a web bookseller needs to do is throw everything that quacks like a book up on its website and then mindlessly process orders—will that be enough to justify its continued existence? Will customers learn to love trash if only it is cheap enough? The electronic booksellers may be the ones who in the long run get disintermediated.

Curt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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Book Distributors in the Age of Electronic Publishing

Will there be a need for book distributors in the age of electronic publishing?

This post will cover what distributors do now at a time when printed books still dominate book sales overall. The next post will describe the role of distributors as the industry transitions to eBooks.

For most of the forty years that book distributors have been around, our major function has been to gather together many independent publishers, thereby creating an entity that booksellers can deal with just as easily and profitably as they deal with the major publishing houses.

IPG, for instance, now actively markets about 50,000 different titles, and another 10,000 eBook titles, to consumers, wholesalers, and resellers down every viable sales channel for books. This marketing effort involves a combination of in-house and commissioned reps that adds up to a sales force of over 200 people, a plethora of sales materials, and a state of the art warehouse that turns out most orders in under 24 hours.

There is never any haggling with our customers over discount or returns because our terms of trade are clearly stated and consistently applied. Our accounts are clean and complete. Our service to our customers is as good (sometimes better) as the largest players in the book marketplace provide.

Many participants in the book business understand the important functions of distributors which I have just described. There are, however, other less obvious yet crucial benefits that distributors bring to the table. Here are three of them:

  1. Independent publishers are independent in more than just one sense. They are independent thinkers down to the soles of their feet, and they do not suffer received wisdom, or fools, gladly. They certainly are not in this game just for the money. The cross-grained mind set of most indie publishers is exactly why they are indispensable to our culture, and why they are often extremely interesting people. No middle of the road for them; they beat the bushes. But working with these interesting people one-on-one takes time and can therefore be expensive. Distributors cheerfully undertake this work because it is an essential part of our job. The other players in the book business are happy to leave this to us.
  2. In addition, there is a very large educational component to what distributors do. Good distributors offer their client publishers solid advice, all of it free, on titles, covers, print runs, publicity, business strategies, and much more. Even the most accomplished authors need editors; even the most sophisticated independent presses can benefit from informed feedback.
  3. And finally, the major distributors have made major investments in the technology that increasingly drives success in the book business. EDI, ASN, and ONIX metadata feeds weekly to hundreds of customers; data mining, POS information gathering and analysis; reorders generated by algorithms trolling through huge databases—these are just a few of the competencies distributors have had to master in order stay competitive with the big publishers. It is certainly no longer just the shoeshine and the smile that brings in the orders. IPG, for instance, now has an IT staff of thirteen highly-trained people working feverishly on new ways of storing, sharing, and interpreting data; and an IT budget of almost a million dollars a year. Very few independent publishers could afford anything like this level of expense, and very few would want to master a technology which is, after all, not what brought them into the book business in the first place. Yet without this sort of technical support at their backs, independent publishers are unlikely to thrive in this changing environment.

For all of these reasons distributors no longer think of themselves just as a conglomeration of publishing companies. Many of the difficult and expensive services we offer our client publishers greatly benefit our customers because these services improve the quality of the books we sell to them, and because our IT expertise makes us a profitable trading partner for them.

Distributors will continue to have an important role to play in the print book business. But will this role disappear as the book business shifts from “tree” books to eBooks? I should say not.

Photo: Curt Matthews, CEO, IPG/Chicago Review Press, Incorporated. Courtesy of The Chicago TribuneCurt Matthews
CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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At What Discount Should Publishers Sell EBooks to Resellers?

Discounts matter. Here is a little history to illustrate that point:

When the mall stores—B Dalton, Walden—arrived on the scene, followed closely in the 1970s by the big box stores—Barnes & Noble, Borders—the big publishers rolled right over to their demands for better discount and of course the independents had to follow.

For the most part these demands for better discount were justified. Better discount for higher volume is a fair and time-honored principle because higher volume usually leads to lower transactional costs. And the book business in those days was very much in need of more marketing push than the small booksellers, who had long dominated the market, could deliver.

But the result was a very wide discount differential, in retrospect too wide. The chains could command a discount off list price of 48-50%. The small stores had to accept 42-44%, on average about 4 or 5% less. The higher discount allowed the chains to mark down the prices of some titles for their customers. The small stores did not have the margin to afford such markdowns. Thousands of independent booksellers went straight out of business. Most of the independent booksellers went straight out of business. The mistake was not that the chains got too much discount; it was that the independents got too little.

How smart does this discount differential look now, as we survey the gaping hole left in the market by all those empty Borders superstores? Perhaps no amount of discount would have saved Borders. But are independent publishers and distributors willing to give the eBooks resellers such favorable discounts that they can afford to lower prices enough to put what is left of the bricks-and-mortar bookstores out of their misery? Are we willing to repeat this sad discount history with eBooks?

My last note in this space compared print prices with eBook prices to try to arrive at an estimate of what eBooks really should cost. A few people commented that my numbers were not exactly right. Nor could they have been because there is no such thing as a typical book. Now let’s have a look at the costs of running a bricks-and–mortar store versus a web based operation. Here again the actual numbers will be all over the map, and the best that can be done is a rough approximation of the comparative costs.

Barnes & Noble was able to build and operate over seven hundred huge, well appointed stores working on a 50% discount arrangement with its suppliers. And the independent booksellers still in the game run shops, much loved by their local communities, on less discount. These booksellers big and small somehow even manage to collect and pay sales taxes! Shouldn’t an eBook reseller be able to thrive on a much narrower margin?

After all, most of the much-celebrated if exaggerated cost savings for publishers enjoyed by eBooks over print books—no warehousing, receiving, picking, packing, or shipping costs, no title ever out-of-stock, no expensive physical stores to build and maintain—surely also accrue to web-based eBook resellers. Can a website be as expensive to run as a shop on Main Street? Can storing just one book file in the cloud cost as much as shelving thousands of print copies in a store?

The big six publishers have used their market power to insist on an Agency Model that gives the eBook resellers 30% of the action. The independent publishers, lacking that market power, have had to settle for a deal that gives most eBook resellers over 50% of the action.

(Yes, there are some complicated side issues having to do with the Agency Model and the Wholesale Model. But the big six publishers went to the mat to get the Agency deal. Which deal would you want? The arguments for the Wholesale deal are just obfuscations offered up by those who would benefit from it.)

If this discount differential persists, many independent publishers will be driven out of business, just as so many independent bookstores had to close their doors when they were denied equitable terms. And what is at stake here is not just money.

Curt Matthews

CEO, IPG/Chicago Review Press, Incorporated

Curt Matthews is the founder and CEO of Chicago Review Press, Incorporated, which is the parent company of Chicago Review Press and of Independent Publishers Group (IPG), the first independent press distributor and now the second largest. Curt has served on the Independent Book Publishers Association (IBPA) board and has also served as its president.

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