Wednesday, September 24, 2014

Amazon Creates New 'X Factor' or Crowdsourcing Offer

This week Amazon added another layer to their offer, a new ‘crowdsourcing’ book submission one, which as with all things Amazon today, immediately polarised many. The lure is to attract would be authors into what some would call a digital slush pile 'X factor’ competition, where readers vote and those works that get the votes, win and potentially get selected for stardom and the recognition their authors want. Under the new service Authors will be asked to submit never before published works. Amazon will then make available a preview of the work and enable readers to review and nominate their favourite and the books with the most nominations will then be reviewed by the Amazon team for potential publication. It is unclear when and if an author can flip a non-selected submission into KDP, but we suspect that will be on offer and provide an added author bonus.
So does the following have an impact on readers, an author, an agent, a publisher and Publishing?
  • Guaranteed advance & competitive royalties: You will receive a guaranteed $1,500 advance and 50% royalties on net eBook revenue.
  • Focused formats: We acquire worldwide publication rights for eBook and audio formats in all languages. You retain all other rights, including print.
  • 5-year renewable terms, $5,000 in royalties: If your book doesn’t earn $5,000 in royalties during your initial 5-year contract term, and any 5-year renewal term after that, you can choose to stop publishing with us.
  • Easy reversions: After two years, your rights in any format or language that remains unpublished, or all rights for any book that earns less than $500 in total royalties in the preceding 12-month period, can be reverted upon request – no questions asked.
  • Early downloads & reviews: One week prior to release date, everyone who nominated your book will receive a free, early copy to help build momentum and customer reviews.
  • Featured Amazon marketing: Your book will be enrolled into the Kindle Owners’ Lending Library, Kindle Unlimited as well as be eligible for targeted email campaigns and promotions.

What is different about this new offer to those offered in the past by some publishers and 3rd parties? Is it any different to say Author Solutions? What does Amazon offer that others don’t?

We may need to step back and stop seeing these offers from Amazon as individual offers and start to see them as part of an overall offer which may even go further than just books.

They already have the market share of physical and digital books and in doing also have the largest known customer base and information on their buying, browsing and taste.  They have the largest digital self-publishing share with not only KDP but also Create Space and Audible. They make money on KDP and have probably done more for self-publishing than all the exploiting services that went before and can even boast some significant successes. Authors love it because it is transparent, rewards are high and they have a huge potential audience they can reach.

What this new move potentially does is move Amazon into a strong position to exclusively capture new talent and win their publishing rights, provides a feed to KDP as well as Publishing and adjusts the reward and rights benchmark both in terms of reward and importantly term time rights. The later can’t be overlooked as it is a major move away from the exclusive and some would suggest ‘in perpetuity’ aspects of the traditional model. Couple this with Amazon’s ability to make all activity transparent and remove those old Chinese royalty walls and there is a certain appeal for all.

Can others follow? We doubt that anyone today has the market vision and offer, reach, breadth and ability to leverage money on top of existing money in this way.


We remember well the lucrative STM journals market and the value added role the subscription agents had carved out consolidating subscriptions across thousands of institutions and publishers. It was a classic one stop shop and rewarding for all parties. The likes of Swets and Ebsco dominated and their position looked increasingly secure. Then came the shift to digital and new players who also offered digital consolidation, publishers who wanted to increasingly deal direct and institutions who discovered the power of buying consortia. The market shifted and that was without the ever growing debate on open access and the commercial model that underpinned the market.

This week Swets filed for bankrupcy with its parent company, Swets & Zeitlinger Group B V, being granted preliminary bankruptcy protection by an Amsterdam court and its payment obligations to creditors frozen and JLM Groenewegen appointed as liquidator. The reason for the fall from grace has much to do with the decline in revenues, squeeze on margin and their inability to service their financial covenants. In good times many borrow and to expand, but in bad times the cost of servicing that debt can cause issues and their 2013 Annual report clearly shows many of the warning signs of a company that was still earning, but not at the rate it needed to. Most companies at that stage would take measures to ensure covenants were not breached, or refinance to change their terms. We don’t know what was undertaken, but today that is immaterial as they are bankrupt.

Swets were founded by Adriaan Swets & Heinrich Zeitlinger in 1901. In 2007 Swets acquired by a Dutch investment firm, Gilde and went to open offices in India, New Zealand, Finland, Austria & Switzerland, China and acquire Boekhandel E. Frencken BV. In 2010 they broadened their offer with an e-book catalog and buying options, supplying over 1 million e-books in 2011. In 2011 they acquired the publisher communication services company Accucoms, They had some 572 employees has offices in 20 countries handling subscription services for some 8,000 customers and 800,000 subscriptions in some 160 countries. (see

How much publishers have lost is not clear, neither is the position of digital services to institutions, but Swets demise will have a big impact on those who relied on that consolidation and alternatives may be around, but as they say. ‘once bite, twice shy.’ Some major publishers have already issued notices some stating that they have not received any 2015 subscription payments for 2015 from Swets and inferring that there may well be money in the pipeline.

The STM Journal market is essential for the dissemination of research and information and has long been a moral and commercial battleground, but it is changing and being challenged not just by academics and institutions who want a better deal, but also by what are often the primary funders – governments. 

Update from The Bookseller 10th Oct 2014: Publishers will soak up the costs...

Swets UK go into Administration : The Bookseller 14/10/14 

Thursday, September 04, 2014

History, Trends and Digital Changes in Media

Digital Music News have taken RIAA data and produced an interesting animated graphic of the changes in music purchases over the last 30 years. We strongly recommend that you view this as it shows how transient some technologies are and how it’s not just the technology that changes but how people buy and relate to media.

It would be great to be able to step forward and predict what will happen in the next twenty years but many of us would be struggling to see further than the next five years.

What is interesting is that the base content hasn’t radically changed, a song is a song and a recording is a recording and music made decades ago now lives comfortable alongside that made yesterday. In some cases the technology actually impeded the quality of the recording and forced the extremes to be toned down to fit.
The other interesting thing is that emerging music format technologies cannibalised their predecessors. 

Cassettes replaced vinyl, CD replaced cassettes, downloads replaced CDs and now streaming is replacing even downloads. We are moving to music on demand which is either paid for through other means, or is on subscription. This changes the question of ownership, collections, sharing and of course the reward earned by musicians, writers and producers. It also can change how we protect or identify usage rights and copyright ownership and some would suggest that the new technologies are more secure than all the belts and whistles of the early music DRM days.

If we produced a similar graphic for books, newsprint, film, tv they all would be different and we need to understand why and what similarities there are. Film and TV are probably the closest to music in the technology step changes, but differ in many other upstream ways. Interestingly the original formats of books and to a degree newsprint aren’t going away and it is easy to see books as the most resistant to technology.

However, all bar newsprint, show very similar patterns to the consumer trend from ‘buying to own’ to ‘subscribing to access’. Yes, the sectors are often moving at different speeds and even different directions but the trend is clear. DRM as we know it today is transient and past its sell by date and will become increasingly irrelevant in a streamed world where it happens albeit less obtrusively.

Therefore some would suggest that the challenge for book publishing is not the latest tablet, ereader, smartphone, app, enhanced ebook, but how we accommodate subscribing to access alongside the traditional buy to own, enabling both to flourish and appeal and importantly reward creators.

Wednesday, September 03, 2014

Is Amazon Poised to Steal Print On Demand?

Many saw Print On Demand (POD) as the ultimate ‘just in time’ production solution to book publishing, which would wipe out all the inefficiencies of the ‘just in case’ approach that plagues the book supply chain. So why didn’t it happen, or did it happen for some and not for others? Is there a new dawn, or just a new set of people who have been sold a pup and not looked hard at the facts?

Today we read that Barnes and Noble are installing Espresso Book Machines in three of their store, including their New York flagship in Union Square. Books-a-Million also has installed two in its stores last year and Powells has one in Portland. But are all these genuine investment cases or mere subsidised trails? 
We are all aware of the huge success Ingram have made with Lightning Source both in the US and UK and the substantial side benefit this has given them with Ingram Digital and in acquiring digital content. Some would suggest that other more single focused operations such as Rowe’s in the UK have been less successful and in general, the main production presses have continued to plough their own furrows. Amazon acquired Booksurge which has now morphed into CreateSpace and has been aligned closely with their Kindle KDP and Audible self-publishing offers. In 2012 Kodak entered into the space with a strategic alliance with Espresso to site POD machine in non book outlets to also service their picture kiosk offer and although two machines were installed in Bartell Drug Stores near Seattle, this apparently has failed to impress Kodak.

In the UK Blackwells installed an Espresso POD machine in their Charring Cross store. There were many mistakes made, with the machine not only taking up valuable retail space, but often being unmanned, as staff wanted to sell books and didn’t want that ‘monitor’ position. The customer also had to often wait, either for someone to operate it, or just for a book to be spat out. Best of all, they had so much faith in its ability to drive sales, they tried to hide the machine around a corner. They didn’t know its audience and it was poorly marketed both within the store and to a wider audience.

The challenge is not the technology, it’s with its adaption and adoption, subsequent return on investment for all and perceived added consumer value. It’s also like eInk technology, in that it looks great and is capable of delivering, but if it takes too long, or the wrong strategy is adopted, it can be overtaken and merely becomes transient technology.

Many suggested that POD would solve many environmental issues but we would suggest that they first may wish to also look closer at the technology and paper stock used in the current machines.

The challenge is that POD means many things to many people.

To some it is a substitute for short print runs. One academic publisher very successfully could predict sales of its back list, so it set thresholds at which POD kicked in and replenished inventory according to forecasted demand and in doing so kept high priced books in stock. It even only had one location worldwide to service distributed hubs and they could afford to fly it around the world once sold. POD can work on predicable sale patterns and high ticket books.

Others waited until the backlist book inventory hit the bottom and operated on sell one make one basis, again ensuring the book remained in stock and obviated the ‘reprint under consideration’ lost orders and print gambles.

Some printed more POD stock than was healthy and used POD to simply reduce their print run exposure and inflated the price to pay for this higher ticket item. Interestingly, ask those POD operators if the print singles or bulk orders first? Also like any machine they return the best investment if they operate flat out and not intermittently between the hours of 9 till 5. 

However, the big challenge for many was the basic model. All tended to stick with the print and distribute model and this was personified by Ingram who printed and then distributed, either on a pick, pack and dispatch direct to order, or more frequently indirect to stock. The real opportunity was to flip from ‘print and distribute’ to ‘distribute and print’ and bring the manufacture closer to the consumer. But to do so one now has to ask what is ‘local’ in a world were delivery is shrinking to same day?

So why do we think that the Barnes and Noble ‘test’ is irrelevant? Firstly, unless the service is perceived as universal then it has questionable marketing advantage and real cost and service issues as there will be more ‘only available at limited stores’ and less ‘available here.’ We don’t envisage a return to the 17 and 18th printer within the shop and the machines are not going to shrink to a desktop today. We do however see it working within institutions and public libraries who often have different needs, service offers and return on investment critique.  

So who could be a winner apart from Ingram? Well this is yet another lesson being taught by Amazon, who, by reducing their delivery times to even same day, have potentially removed the ‘local’ issue. If the can buy online and have it turned around in the same timescale as a traditionally printed book, will the customer care if it’s POD or traditional? Amazon has also gone for the classic sell one make one model that aligns to self publishing and positioned it alongside KDP and their Audible self publishing offers. Tomorrow they are in a great position to now offer the same service to publishers and retailers who wish to reduce stock but increase availability. Maybe Booksurge was a very canny buy and under CreateSpace can become another part of an increasingly well thought through and formidable holistic offer.