E-Book Sales: Behind the Stats

Monday, July 19th, 2010

There is mixed news with regard to book sales in May of this year. Store sales were down 2.6% but publisher sales were up by 9.8%. Read all the various stats here. Remember these are simply comparison of 2010 monthly numbers with 2009.

The biggest area of growth, percentage-wise, is in e-books (up 162.8%).

But lets look at actual dollars, not percentages.

Publisher sales (according to the Association of American Publishers) were $715.3 million in May. Of that total, e-books accounted for $29.3 million…or about 4%. If this was a 162% jump over 2009, then e-book sales in May of last year were $11.2 million.

There is no question that this is a huge leap. But it still means that 96% of all sales are still in hard copy.

Many experts claim that in five years (by the year 2015) that e-books will “tip” and account for over 50% of all book sales. I’ve heard this from two major publishers (one was the head of the digital initiatives for that publisher) and from my friend Randy Ingermanson in his excellent e-zine (read pages 2-11 for his full report on the issue).

For that to happen a 100% growth rate would have to be sustained. That would mean 2011 would have e-books at 8% of sales, 2012 at 16% of sales, 2013 at 32%, etc.

I’m not arguing that it won’t happen. Just that it may not happen quite so fast. Sustaining that rate of growth is a lot harder than it looks on paper (no pun intended). Please read my earlier blog post “Is Print Dead” to go further behind these type of statistics (in that post I attempt to show that hard copy CDs still account for nearly 70% of all music sales).

I’ve written earlier that I own a Kindle and like it. I have bought a number of books for the device. And in fact have purchased many books that I already owned in paper…sort of a “best of” or “favorites” bookshelf. Why? Because I’m a collector. And having those books with me at all times is a neat thing. Plus they become searchable. It also means that I can have access to these books forever and from wherever I am. And I’m not in fear of losing books when the corner of the garage collapses in a big rain storm (true story). However, if there are a lot of people like me, then the “growth” is somewhat skewed.

I hesitantly compare this to the transition from record albums to cassette tapes to compact discs. Or the transition from VHS to DVD (and now to Blue-Ray). I suspect many of you purchased albums or movies that you already owned because you wanted them in the new format, for whatever reason. They were your favorites. So initially some of your expenditures were not for new material. Of course, eventually we began purchasing 100% of all new music or movies in the new format. And that is where the direct comparison with books breaks down.

There are legion of readers who will not convert to e-books. An amateur poll I’ve taken of folks (family, friends, professional acquaintances) has been very interesting. Most are intrigued by the Kindle device. One showed me their iPad (with an accompanying gloat). But few were ready to embrace switching from p-books (paper) to e-books (electronic). And none were prepared to go all digital any time soon.

I reiterate what I’ve said before. This is one of the most exciting times to be in this industry. The changes are rapid, they are innovative, and they are creative. Writers who can create dynamic content have nothing to fear. The consumer continues to demand great content in whatever form they can get it. Literary agents like myself, make it our job to watch these developments carefully and to continue to safeguard our client’s revenue and their ideas.

Tags: Bookselling, E-Books, Publishing
Posted in E-Books, Publishing | 14 Comments »

The Shack Gets Sued

Wednesday, July 14th, 2010

Sad news from the LA Times that the author and publishers of The Shack are now in court fighting over the royalty earnings.

Read the entire article here.

Then weep.

Then pray that cooler heads prevail and that it can somehow be kept out of the court system.

The key element to the story, from my agent’s perspective, is that there was not a solid contract in place from the beginning. It started with a hand shake. Then when a big publisher (FaithWords, a division of Hachette) wanted to get involved in distribution a contract was put in place. But the agreement between the publisher, Windblown Media, and the author has terminology that remains unclear. Signing a contract that pays based on net profits can be trouble unless “profit” is defined very clearly. Most book contracts are based either on retail price or on net receipts. Big difference between receipts and profits. Young claims that Windblown has under-reported the profits.

Windblown Media counter-sued and claims that their owners Wayne Jacobsen and Brad Cummings should be named as co-authors of the book because of the work they did back in the beginning of the project.

So Hachette, in a defensive move, had to file their own lawsuit against Windblown Media and William P. Young. Why? Because they have one million dollars they owe to these fellows, but if they send a check, and it is later determined by the other lawsuits that the money was paid incorrectly, then Hachette could be sued. So they very wisely put the money in a judicial escrow account where it will remain until Windblown and Young settle their dispute. In other words, from now on…no one gets paid…until the things are settled by the courts.

What a mess.

Clearly some huge misunderstandings have occurred. Dig even deeper into the article and note that “reserves against returns” is misunderstood. In addition there is dispute over reduced royalties paid on books sold at a very high discount. Both are well documented industry practices and are usually in a contract with clear definitions.

This illustrates why writers need literary agents to help with their intellectual property concerns. This week I have helped three clients unravel their royalty statements. Each case had different concerns and because of what I do I could understand and explain the situation. In one case we are writing a note to the publisher asking for clarification. In another case I think the royalty rate for e-books does not match the contractual rate and thus a note has been sent asking for clarification.

I have seen situations among writing friends disintegrate over editorial and publishing issues. That is why I encourage anyone who is wanting to collaborate on a project that they get a solid collaboration agreement in place as early as possible.

Don’t just shake hands and hope for honorable behavior. We would like to hope for honor and honesty but we are all fallen creatures in desperate need of redemption.

At least consider using a conciliation organization like Peacemakers (click here for the first steps in dispute resolution) before taking anyone to court.

Tags: Bookselling, Publishing, Writing
Posted in Publishing | 10 Comments »

What’s up with Christian Retail?

Monday, May 10th, 2010

Twice in the last 30 days I have been interviewed about the “state of the industry.” The journalist’s questions were insightful and thought I would share some of them with you. My answers have been expanded beyond the original ones since I have more space to work with here.

1. What do you believe to be the most important trend in Christian publishing and why?

This can be a complex question depending on which part of publishing being discussed. The obvious answer is the digital revolution. While e-book sales are still only a tiny percentage of the whole, the foundations being laid today will have long term implications.

In fiction I have been encouraged by the continued diversity in publisher’s acquisitions. While “romance” is king, a great story can still get a chance.

In non-fiction there has been a concerted push by publishers to acquire only those authors with a built-in audience of some sort. This is especially hard for the debut writers who have enormous talent and insight but have yet to construct a personal following. I even had one editor at a publishing house write me the following after I groused about a rejection letter that didn’t square with what I knew about that publisher:

“…it seems we no longer trust the old methods of reading the market, trying to get ahead of the curve on reader tastes and needs, and so forth. Now we have to prove a book’s success in advance, on paper, using mathematics.”

That is a stunning statement but in a sense is not news. If writers have not come to grips with the fact that publishing is a business, then now is the time to do so. Never forget that without a “bottom line” (i.e. profit) the publisher goes away (or they downsize) and everyone gets hurt.

Some will read that and despair. Others will shrug and say, “What’s new?” I think it is exciting that the industry is becoming that much more professional and the demands on excellence, quality, and “big ideas” will only help create better and more successful books.

2. When were you last in a Christian store and why?

In February, while traveling on business, I visited a local Christian store to observe their layout, featured products, and whether our client’s books were in stock. This particular store is part of a Christian retail chain with multiple locations.

The results were mixed. A front-of-store cardboard display was empty of product which was a good for store sales – meaning they had sold out, but signaled to me that their buyer was much too conservative (“stack ‘em high and watch ‘em fly” vs. “keep it low and they won’t go”). Since I did not own that item they missed out on selling one to me.

3. What can Christian stores do to better differentiate themselves from other channels selling Christian products?

Remember that I was in the Christian bookstore business for over a decade and our store received the National Store of the Year award from CBA (The Christian Booksellers Association) in 1989. So while my personal in-store experience is now nearly two decades out of date, I still understand many of the nuances of Christian retail.

My answer to the above question is “Personal service and community building.” The competition isn’t always the online channels. Sometimes it is simply those outlets that choose the top 10 titles to display. Thus product knowledge and personal relationships are the key to customer retention.

We had a Christian store in our area where our family shopped because of a long term friendship we had with its owner. Unfortunately, after 35 years it closed its doors after the city decided to build light rail in front of her location and made it nearly impossible to visit. We really don’t have an alternate store within a reasonable driving distance, which is disappointing in a city the size of Phoenix.

The CBA store is still a powerful customer for the Christian publishing community. But as a whole is losing “market share.” This market share has been shaved by online retailing, big box retailing that siphons off bestsellers, and a general malaise for the specialty retailer. The gift side of the CBA store is where most stores will find their survival because it does not have the competition from online stores. I hear many who are highly critical of the non-book section of the Christian store. Let’s stop that, okay? Let’s consider changing the view of the Christian bookstore to one of a Christian “supply” store or, if you must, a Christian “boutique.” Wherever there are vital and growing churches there are vital and growing Christian stores.

At the risk of sounding out of date I remember that the Christian stores I managed, back in the 80s, served nearly 500 church accounts. Once we counted the number of student curriculum packets we sold in one quarter and were startled to find that we sold 10,000 pieces of student material intended for Sunday School education for children. So while we had some plaques and jewelry and cards and posters and knick-knacks in the store we also had curriculum, at least 3,000 book titles, and hundreds of Bibles.

If you can, support your local Christian store, they serve a vital role as the Supply Sergeants of the Kingdom.

4. Do you own an e-book reader and if so what kind and what are you currently reading on it?

I have owned the Kindle since it was first released (currently using the Kindle 2). I last read a client’s manuscript on it while traveling (uploaded from my computer to the Kindle). In addition I also re-read Phil Vischer’s Me, Myself, and Bob: A True Story after hearing him speak on the topic at a recent conference.

I have resisted the lure of the iPad so far. I plan to wait for the second version to see if some of the bugs get worked out. Unfortunately the “swiping” motion on the screen gives me a bit of vertigo. I find that standing in the Apple Store playing with it gives me a slight headache. So I may never be able to use one comfortably.

Tags: Bookselling, Editors, Proposals, Publishing, Rejection, Writing
Posted in Publishing | 8 Comments »

HarperStudio is History

Monday, April 5th, 2010

Back on March 17 I blogged about the changes at HarperStudio and asked if this could mean that division would close down. Today it was announced that it has come to pass, the division is no more.

HarperStudio had made big news by setting up a low advance model in exchange for high royalties. It was termed a “profit sharing” model. (of course define “profit” first… ) Plus they sold their books on a non-returnable basis to the stores, both online and brick & mortar.

It was a highly creative idea and caused quite a stir, especially when there was talk of a 50/50 profit split.

My questions are these. Does this mean the end to the experiment of “profit sharing” in publishing?Also…

Did the model fail to produce the necessary revenue or did the acquisitions team fail to select the right titles?

At the risk of being a hindsight prophet, I think it was the latter. Don’t get me wrong. The books themselves are quality titles for the most part, but none of them became “blockbusters.” The model might work if the book generates enough revenue. But the combination of a modest list, with no break out bestsellers, and the fact that the stores could not return slow moving titles probably contributed to conservative buying patterns and kept the big box retailers from “stacking ‘em high.”

What do you think?

HarperStudio, the unusual imprint founded two years ago by Bob Miller, is being shut down and its books and staff will land at other HarperCollins imprints. Miller left Harper last month to become group publisher at Workman (Shelf Awareness, March 16, 2010).

The final titles to be published by HarperStudio will be the summer 2010 list. All fall titles and titles scheduled to be published thereafter will be published by other HarperCollins imprints. In a memo to employees, Michael Morrison, president and publisher of U.S. general books and Canada, said that Harper “will be contacting agents and authors to discuss the best editors and imprints for” its fall and other future titles. “All of our imprints are happy to discuss profit sharing scenarios on a book by book basis.”

Debbie Stier, associate publisher of HarperStudio and director of digital marketing for HarperCollins, continues as director of digital marketing and continues to acquire books for all imprints as editor-at-large. Kathryn Ratcliffe-Lee continues to report to Stier.

Senior editor Julia Cheiffetz is moving to the Harper imprint. Assistant editor Katie Salisbury continues to report to Cheiffetz.

Jessica Wiener continues as director of marketing.

In its brief life, HarperStudio published mainly nonfiction, offered low advances with profit-sharing, tried to sell titles on a nonreturnable basis and signed many authors who were well-known in other fields or were writers who wanted to try projects that differed from their usual ones.

Tags: Bookselling, Publishing
Posted in Publishing | 4 Comments »