Sunday, June 19, 2011

Are You Selling Your eBooks Via An Honesty Box?

Imagine you have 100 ebooks and each has to be handed over to not one reselle,r but potentially many. Each reseller stores the files on their system and effectively sells copies of the file to their customers and can also sell them through other resellers to their clients. The files sold may be complete download sales and could if I have granted these could be sold as separate chapters. Some could be sold online as direct rentals, or under subscription. Some may be loaned by ‘libraries’. Revenue could be subject to an agency model on a ‘fixed price’ , or net sales as per a wholesaler terms. Whatever, the model, whatever the channel, whatever the price you only effectively learn what has been sold long after the event.

Now ask your CFO if they are happy giving the company assets to all resellers and then waiting, for them to tell you what they have sold and to pay you what some call as being ‘on consignment’ in a print world and via an ‘honesty box’ in the digital world. The difference is that in the print world you can count the units out the door and the stock in hand. In a digital world you merely hand over one copy of which many copies are made and sold, hopefully many times.

We are not questioning the integrity of any reseller service, we are merely pointing out that the digital ebook world is built on a lots of trust and not a lot of counter balances. Some aggregators do provide some statistics of sales online, others you wait for the sales report to tell you the facts after the event. In all cases money sits in cash flows waiting for yesterday’s financial processing to grind into action.

Now spare a thought for the author who is one link up the chain and has to wait until his royalty statement is produced to find out what sold and the royalties earned. It often can’t be done any sooner as it has ‘to be processed and consolidated with the old print royalty system’. We would suggest that authors may be a bit more digitally responsive with transparency and speedier in not instant reward. Some would suggest that they first have to earn out any advance on front list but on back list, we shouldn’t have the same block and maybe we should be thinking how and why rather than why not?

Digital is different but we spend far too much time dreaming up the sizzle and worrying about the formats and standards and selling and often very little focusing on how we could collect cash faster and more transparently. The next thing we will have is a new audit service to pour over the figures to validate that they are accurate or not and of course incur yet more cost to offset. The obvious candidates for this would be the likes of Nielson and Bowker.

We are living in a world of instant cash transactions, where a credit transaction made anywhere in the world can be see by all, where information is real time. We subject the ebooks to DRM authentication which automatically can validate licences in flight and the likes of Adobe can authenticate every encrypted licence of an ebook using their DRM solution in real time, yet we can’t appear to see sales and collect cash on payment. It somewhat ironic that it could be argued that Adobe today has better sales data on the transactions they licence, than the publishers! There should be no digital returns and what disputes may occur, can always be dealt with retrospectively. So why has the standards and processes not been delivered to provide live and transparent reporting of sales transactions in a standard manner. We bet its coming but not soon and probably at the same speed that the returns issue did in print.

Perhaps we have been so obsessed with readers, platforms, formats, aggregators, pricing and DRM we have forgotten to close the loop? Perhaps we shouldn’t be thinking about ‘messages’ as much as instant processes.


Sheila Bounford said...

It is great to see this subject getting a public airing. Accuntability for ebook sales and speed of reporting are subjects brushed under the carpet far too often - and until we get them out into the open, we will not find satisfactory eBook business models. Well done for a brave post.

Bill McCoy said...

The problem with digital goods being harder to account for than physical goods is of course not unique to eBooks. Movie and especially music industries are farther along the path to digital distribution so I think we should evaluate what's happening there. The DECE's proposed Ultraviolet framework for a cloud-based "rights locker" compatible with multiple DRM systems is one approach that would, among other benefits, enable more accurate sales reporting up the chain to publishers. There is some discussion about doing something like this for eBooks.

Martyn Daniels said...

bill, i like the thinking My are: we create a rights registry with owners all logged and everytime a sale passes go it notches it up on a counter which the owner has access to see where the file came from and what the sale type was. Great but we have a rights industry that even doesn't have a rights registry today and even often used the same iSBN as a catch all for everything and has no real way to consolidate works. Makes one wonder what the standards bodies are doing about reconciling and collecting the cash

Alex said...

The standards bodies are - unsurprisingly - working on standards, testing standards and looking at standards. (on top of the more public work of talking about them)

Such as EDItX, which I presume fits part of your question.

Unknown said...

I believe the way forward is not with ebooks but with e-reports. These can be much quicker to write and to read, but importantly can focus on key business issues without confusing the reader. So the purpose of an e-report is to serve as a knowledge injection for a business, filling a knowledge gap and helping the business avoid risk and take advantage of opportunities.
e-reports are like individual chapters in ebooks, and can even be based on ebook chapters.
One site which allows users to sell, buy and give away ebooks is
Another point that there is a 'control panel' on this site which allows you to see sales and profits at any point, and there is no membership charge, just a commission when you sell.