Used Kindle eBooks?

Amazon has patented a means to sell used ebooks within the Kindle system.  A book will be branded within the system when it is bought, then when the buyer puts it up for resale at the Kindle store, it will be removed from his account and transferred to the buyer’s account.  Amazon will receive a small fee for each sale.  A limited number of sales of each book may or may not be included in the system.

According to copyright law, specifically “The Doctrine of First Sale,” this is illegal because digital goods aren’t physical things so they can’t be resold.  (See my article on “The First Sale Doctrine and eBooks” for more details.  http://mbyerly.blogspot.com/2009/04/first-sale-doctrine-and-ebooks.html  )

But a legal battle is currently being fought between ReDigi, a used digital music store, and the various groups in the music industry over a similar system.  If ReDigi is able to win this, Amazon will probably move forward with their own system of resale.  

At first glance, it appears Amazon would be cutting into its own Kindle profits with this system, but Amazon isn’t known for its poor business practices.    Here’s what it will gain from the system.  

Buyers go for the cheapest prices.  If a used Kindle ebook is cheaper than any other version of the book, buyers will start using the Kindle system and its hardware.  iTunes, Nook, and other sites won’t be able to match these lower prices unless they start selling new ebooks for next to nothing or they put into place their own reselling system.  Such a complex system would take some time, perhaps years, so Amazon would gain the advantage in the market for many years to come.  

Some in the industry believe that Amazon is intent on killing off publishers so authors will have to go the self-publishing route, and authors as individuals have no real bargaining power when it comes to the terms Amazon will set.  (See “Used eBooks: The Ridiculous Idea that Could Also Destroy Publishing”  http://motherboard.vice.com/blog/used-ebooks-is-a-ridiculous-idea-that-could-ruin-authors-publishers  )

What will all this mean if Amazon’s used ebook system becomes available?  Readers may be happy with this system, but authors and publishers will not.  Publishing has a very low profit margin, as is, and anything that will cut into that profit will hurt, sometimes to the point of putting authors and publishers out of business.  

Authors like me have been busy educating readers on “The First Sale Doctrine” so they will know that ebooks can’t be resold, loaned, or put online for free, but a system like this will make readers believe that, if Amazon can do this, so can they. Piracy will spread.

If Amazon gains total supremacy in the distribution market, then they will be able to dictate the terms in contracts with authors and publishers, and those terms will shift even more of the profit into Amazon’s pockets.

If the other distribution markets fail and Amazon is the only source of ebooks, it can close down the used market place, and readers will have to pay much more for the surviving content.  After all, Amazon is in it for Amazon as they have proven over and over again.  

This system may not be the eBook Zombie Apocalypse as a universal removal of “First Sale Doctrine” on digital goods would be, but it may very well be the beginning of the end of publishing as a profitable venture.  

UPDATE: On March 30, 2013, a federal court ruled in the Capitol Records versus ReDigi case that it is illegal to sell "used" digital files.  No word yet if ReDigi will continue to fight this battle.  

http://arstechnica.com/tech-policy/2013/04/can-i-resell-my-mp3s-redux-federal-judge-says-no/

Ebook Prices, PUBLISHING

In an interview, (link below), nonfiction author Seth Godin talks about ebooks and publishing. He's a proponent of free ebooks to sell paper books, but in this interview he suggests that ebooks be priced between one and two dollars each.

As someone who's watched the ebook industry for a number of years, here's my reply to his impractical suggestion.

Cheap ebooks are a lovely thought, but if a publisher wants to sell their books through the major book venues like Fictionwise and Amazon/Kindle, they must price the book with that in mind.

The vast majority of buyers only buy through the big venues instead of through the publisher website so most publishers can't break even if they don't have their books at places like Fictionwise.

I know that for every book I sell through one of my publishers' sites, I sell 50 or more at the big venues.

Here's why books have to be priced more expensively if they are to be sold through the big venues.

Fictionwise makes 50% on each ebook sold so even if the publisher prices the book near cost, he would have to increase the price by 50% just to break even. Amazon/Kindle takes 66% of the cover price. The same problem.

What's left is usually divided evenly between the publisher and the writer if it's an epublisher, 15% for the author for major publishers.

And if the publisher doesn't put the book's price high enough, the middleman venues where a majority of ebooks are sold aren't interested in the product because they can't come out even after they do their usual price markdown.

If the publisher wishes to keep his books at the big venues, he can't undersell the books at his own site so he can't lower the price there, either.

In the best of all possible worlds, the reader would pay a few bucks, but readers want the simplicity of buying at one site, not many, so the prices go up. Sad, but true.

LINK TO GOLDIN'S INTERVIEW:
http://www.26thstory.com/blog/2008/11/1-we-have-a-fresh-slate-at-harperstudio-whats-your-advice---the-huge-opportunity-for-book-publishers-is-to-get-unstuck-yo.html

EDITOR INTERVIEWED: On November 6th, Novelists, Inc., interviewed Peter Senftleben, an editorial assistant at Kensington. He talks about what he's looking for.

http://www.ninc.com/blog/

NETWORKING SITES PROMOTIONAL VALUE: Author Courtney Summers discusses the value of various networking sites for book promotion.

http://theswivet.blogspot.com/2008/11/guest-blogger-courtney-summers-on.html

Ebook Royalties, PUBLISHING

Random House has just announced that it is lowering its ebook royalty rate from 25 percent of the retail price of the ebook to 25 percent of the net price (book price minus the distributor's percentage equals net) . Since most distributors take 50% or more as their distributor percentage, this is a hefty cut.

Other major publishers give a 15 percent royalty on the book price.

In comparison, most epublishers give between 35 to 50 percent of the book price. They must also pay for the cost of editing, covers, Internet infrastructure, etc., which the major publishers have already paid for when they create the paper books.

Is there anything wrong with this picture?

The big publishers keep saying that ebooks are expensive to produce, but most epublishers will tell you that all that is needed is a digital copy of the book in a specific format like PDF which the distributors will format themselves for a fee.

The big publishers, so far, have been no more willing to sell ebooks on their sites than they will sell paper copies of their books so all their talk about expenses is smoke and mirrors to hide their grab for a cheap royalty on what will become the major method of book distribution in the years to come.

Some agents have said that the publishers promise to raise the royalty rates when ebooks become more profitable, but that's a lie that has been used a number of times.

For example, during the paper shortages and rapid rise in price of paper, some years back, the publishers asked for a rate cut from authors and promised that the rate would go back up after the crisis. As you can guess, the rates have never risen.

All of this gives me such a glorious, yet painful, sense of irony about the situation. When ebook publishers started becoming successful, many traditionally published authors screamed like virgins at an orgy because they thought epublishing would harm their careers and incomes. By accepting 15% as "standard," they may be harming the epublished if epublishers follow suite and accept this new standard.


BLOGS OF INTEREST
MJ Rose talked about book promotion at agent Nathan Bransford's blog on Thursday, October 23rd. She's a genius at marketing so it's more than worth the read. http://nathanbransford.blogspot.com/

She also continues on the subject at http://mjroseblog.typepad.com/buzz_balls_hype/2008/03/which-brings-us.html .

On Tuesday and Wednesday the 22nd and 23rd, on Nathan's blog, Michelle Moran also discussed promotion.

QUESTIONS, YOU HAVE QUESTIONS? Send me your questions about publishing and craft at marilynnbyerly @ aol.com. (Remove spaces in address.)

Part Six

The Current State of Publishing and Bookselling, Part 6

WHAT ABOUT EPUBLISHING?

Right now, few authors can make a living at epublishing. Even erotica, the growth industry of epublishing, no longer pays the bills as it once did.

The market has become glutted with books from other small publishers, and the major publishers have moved into the market in ebook and paper formats.

Venues for ebooks like Fictionwise are currently being glutted with backlist from major publishers so that unknown authors can sink in a sea of books quite fast. Romance is particularly prone to this.

The authors who are successful in epublishing are prolific, produce quality books of one kind so they build their sales through backlist and loyal readers, and they market constantly to sell that first book to new readers.

Of course, this is the primary survival means in paper book publishing for most authors right now.

~*~

Tomorrow, I'll suggest ways that readers and writers can fight to save the books they love.

Part Four

The Current State of Publishing and Bookselling, Part 4

AMAZON, THE 900 POUND GORILLA

Some writers see Amazon as the writer's and reader's friend, but, increasingly, Amazon is showing its ugly profit-is-everything nature.

The used book shown with the new book in search results is one example of this. Amazon makes more profit by acting as middleman for used booksellers than it does by selling new books.

Amazon's current attempt to force publishers to use their POD provider is an even more frightening example of its methods.

In recent years, as bookstores have carried fewer books from big publishers and almost none of the small publishers, Amazon has been seen as the even playing field by many writers and publishers. If you had a book to sell, Amazon was there to sell it.

A few years back, Amazon made it much harder for small press to sell on Amazon, and some publishers went out of business.

Now, Amazon is tightening their grip on the smaller publishers by telling them they have to use Amazon-owned Booksurge for POD.

Amazon's contract says that Amazon will control the price of the book sold, its price cannot be lowered at any other venue including the publisher's site, and it will control the look of the book and its quality.

For the right to have a "buy now" on their books, publishers will be at the whim of Amazon in most aspects of their product.

With Amazon moving aggressively into epublishing with the Kindle, publishers may lose all control of their product if they knuckle under to these tactics.

Amazon justifies all this as a means to make it simpler for them to ship books all at once, but they don't say that POD books printed through Ingram's Lightning Source and other POD providers are shipped the same day with the Amazon label attached so the buyer can't tell who has printed it or shipped it.

For complete details on this situation and the class action lawsuit by some small publishers against Amazon, go here http://antitrust.booklocker.com/

Only small press is the victim of this current Amazon contract stipulation right now, but, if the publishing industry doesn't stand firm against it, the Amazon gorilla will squash the rest of the publishing industry.

Now, on to my guesses on what all this means.

The Current State of Publishing and Bookselling, Part 2

Continuing my overview of what has happened in recent months.

ONLINE MARKETS

Amazon remains the Godzilla of online book sales in both new and used books while Barnes & Noble online, etc., eat the crumbs.

Amazon gives readers an incredible selection of books not found in brick and mortar stores so they are the place to go for serious readers. A month's entire line of books by most publishers is available at Amazon, and their search functions as well as their Listmania and "if you like this book, you'll like that book" features, and reader blogs help readers find books and authors they won't find elsewhere.

Used book sites like Alibris are a major force in book buying as readers search for bargains, and Amazon displays the used book right beside the new book in their search results.


PRINT ON DEMAND BOOKS

Most major publishers do large print runs of their titles and store the books to sell through bookstores, etc.

A large print run requires a large expense up front in the printing followed by the cost of storing and moving inventory. For massmarket (standard-sized paperbacks), books not sold at the bookstore have their cover ripped off and returned while the book itself goes into the landfill. The publisher pays for the shipping in both directions.

Obviously, this is a serious waste of money and resources, but the bookstores and publishers seem addicted to this model.

In recent years, print on demand books (POD) are becoming an important part of the paper book process.

POD books are printed, one at a time, to order and shipped to the store or the buyer. Large publishers use POD for backlist, and small publishers and individuals who can't afford large print runs also use it.

Recently, a major publisher used POD to catch up on unexpectedly high demand of a nonfiction title.

Most of the major book distributors have their own POD company as does Amazon.

~*~

Tomorrow, I'll continue my overview by discussing ebooks and used books.

REMINDER: If you'd like to receive a copy of my blog via email, join my yahoogroup newsletter by sending a blank email to ByerlyWriting-subscribe@yahoogroups.com

The Current State of Publishing and Bookselling, Part 1

Today, I'm starting a short series of blogs on the state of publishing and bookselling and how that affects writers and readers. I'm focusing on genre novels.

Sources for the information I'm using include "Publishers Weekly," "Shelf Awareness," "Publisher's Lunch," and various professional trade blogs.

My credentials: I'm a publishing news junkie of over thirty years, and a published author of over ten years.

First, an overview of what's happening in the business.

THE ECONOMY

Not surprisingly, the problems with the economy are hurting the sale of books. If it's a choice between food and gas or books, books are almost always the loser.

Even romance, which has always been considered an economy-proof genre, has struggled recently although it remains healthy with steady growth.

Readers are borrowing books at the library and buying used books. Neither venue is good for the author bottom line.

If a reader has a choice between a "name" favorite author and another author for a new book purchase, she will buy the name author. New authors' books tend to be bought used.

THE BOOKSTORES, CHAINS, AND BIG BOX STORES

The current trends in bookstores and other physical locations is more books by just a few authors.

Target and Walmart which sell large numbers of books have cut down the amount of books by around fifty percent in the last few years. The books added to the shelves each month are almost always that month's list leader -- the publisher's lead title for that month, and it's usually a name author.

They believe they make money by having more space taken up by more books by a few bestsellers than with a wider range of authors and books.

Meanwhile, the chains like Barnes & Noble and Borders are putting out more authors and titles, but they, too, no longer carry most of that month's books by the major publishers.

Borders has started a series of concept stores which display books cover forward. So far, they've seen an increase in sales although they have cut the number of titles displayed by thirty percent.

Independent stores are dying at an alarming rate, and those which remain often keep themselves afloat by selling used books.

Still, a vast majority of all books sold are in brick and mortar stores.

In the next days, I'll cover online markets, print on demand, ebooks, and the problems with Amazon, then I'll discuss options for authors as well as the near and far future as publishing changes.

Mysteries and Thrillers, the state of the MARKET

The Sisters in Crime blog has an interesting four-part series on the state of the mystery/thriller market. The writers visited a number of major publishers, agents, and publicists and asked questions about the markets and how to promote and build a career.

Most of the information is about the mystery/thriller market, but the blogs are well worth any writer's reading for the information about promotion and building careers.

The entries are in the final days of May.

Here's the link:

http://sisters-in-crime-sinc.blogspot.com/

The Long and Short of the Submissions Process, MARKETS

Two respected agents blogged recently on the time it takes for a book to go from submission to acceptance.

Jessica Faust of Bookends talks about it in her March 11th blog.
http://bookendslitagency.blogspot.com/

Nathan Bransford of Curtis Brown talks about it in his March 6th blog.
http://nathanbransford.blogspot.com/

Please note that both talk about books submitted by literary agencies. A book submitted by the author could take much, much longer.

NOTE: I'll be a guest at Stellarcon/Deep South Con (High Point, NC) this weekend. If you're there, come and say "hey." I'll be the matronly hobbit with the guest badge.
http://www.stellarcon.org/home

Spotting a Publishing Scam

This article by a Wisconsin lawyer for other lawyers is a must read for all of us in the publishing industry.

http://www.wisbar.org/AM/Template.cfm?Section=Wisconsin_Lawyer&template=/CM/ContentDisplay.cfm&contentid=68934

If this long link doesn't work, do a Google of "Ellen M. Kozak" and "scam" and it should come up as the first result.


NOTE: I won't post a blog tomorrow, but I'll be back on Monday. If you have a subject you'd like me to cover, please contact me via my blog or my Yahoogroups ByerlyWriting@yahoogroups.com.