Three Bits Related to E-Commerce

I could link to a dozen great posts from Ron Hogan of GalleyCat about BEA, but there are two in particular that really jumped out at me, in part because we’ve been talking so much about eBooks and Kindles and whatnot . . .

The first is about Book Publishing’s 2.0 Business Model panel that took place last week and featured independent publisher Derek Powazek, Dave Hanley from Shelfari, and author Scott Sigler. (Sigler is most well known for landing a book deal after serializing and giving away his novel for free online. It’s what you might call, “creating an audience.”)

Anyway, the basic idea is that we shouldn’t be afraid of the internet and giving things away and instead should embrace ways in which readers can interact with one another:

“The old idea that putting something you want to sell in print online devalues the print version is wrong,” Powazek said in agreement, adding that even the distinction between online and offline reading is irrelevant now. And while the book publisher’s role as a source of authority, as exercised by editorial decision, will endure, it’s important to recognize that readers already have the ability to become equally authoritative in slightly different ways. “There are already communities of people out there who consume your work,” he told the publishing execs in the audience. “You just haven’t given them the tools to talk to each other yet.”

Contrast this though with Ron’s write up of Edward Wyatt’s article in the New York Times that’s primarily about the Kindle and the unease surrounding Amazon’s pricing scheme.

According to Wyatt:

But excitement about the Kindle, which was introduced in November, also worries some publishing executives, who fear Amazon’s still-growing power as a bookseller. Those executives note that Amazon currently sells most of its Kindle books to customers for a price well below what it pays publishers, and they anticipate that it will not be long before Amazon begins using the Kindle’s popularity as a lever to demand that publishers cut prices. [. . .]

Amazon sells most Kindle books for $9.99 or less. Publishers say that they generally sell electronic books to Amazon for the same price as physical books, or about 45 percent to 50 percent of the cover price.

According to a few publishing insiders, the current standard for eBook royalties to authors is 25% of net. Which is slightly higher than the 7.5% of retail price standard for print books. With books generally discounted by 45% to retailers, the difference for a $20 book would be royalties of $2.75/e-version compared to $1.50/print. That starts to cut into a publishers profit margin, which is already quite small . . .

One of the most interesting things Jeff Bezos said was that he believes that the Kindle versions are encouraging people to buy more books rather than simply switching from print to digital. (Some publishing execs dispute that claim.)

Contrast both of these things with the report on Gawker this morning speculating (based on some tangible evidence) that Jane Friedman was pushed out of HarperCollins because of money and that Rupert wants to “see new growth.”

What’s a publisher to do? Give away eBooks? Wait for Amazon to “lower the boom”? For corporate publishers these are huge issues waiting in the wings, especially as even more pressure is placed on CEOs to meet expectations. Interesting times ahead . . .