Women and cyber piracy

According to an article in the London Evening Standard this week, a survey by the law firm Wiggin said that one in eight femail ebook readers over the age of 35 has admitted to downloading pirated version of books. Until now the domain of the male of the species.. the growing popularity of ebooks has shifted the profile of the internet pirate..

An entrepreneur's view of ebooks and the publishing market

The economics and business model of ebooks has caught the attention of entrepreneur Luke Johnson who runs the private equity firm Risk Capital Partners. He’s also a NED at publisher Phaidon so is well placed to reflect on this fast moving market – though he acknowledges that Phaidon – art, cookery, illustrated books may be less affected by this technological and market change for the time being. He has also recently written several books and where content is time sensitive, as for example with business books, waiting a year from manuscript to bookshop is ‘ludicrous’. Here are some of his reflections, predictions which can be found in full on FT.com Wednesday May 11, 2011.

- In the US, digital sales are at least 20% of large publishers’ revenues and growing fast.

- Authors generally receive 25% royalties on ebooks (15% for print) – given the much larger gross margins of ebooks, publishers need to start sharing more of this revenue with authors – in the meantime publishers such as Penguin are recording huge profits by maintaining ebook price points close to or at the level of print.

- Publishers could be missing a trick – the huge number of English speakers and readers who do not currently buy books but who might if prices were right – in other words a volume opportunity around much lower price points.

- There are of course challenges – piracy is a fear , as is the disappearance of high street bookstores; the increased dominance of Amazon; growing use of devices such as Kindle and iPad and other ebook readers; and decreasing importance of libraries will all contribute to an urgent need to re-think publishing business models and skills (e.g. SEO - Search Engine Optimisation).

- Good publishing brands (perhaps series too) can find success – Johnson cites the Dummies series where a reader is unlikely to know an author’s name but will likely own several copies of the series.

- Overall, he sees huge opportunities and threats as well as consolidation and upstarts coming from nowhere.

- Comment – an interesting perspective and good to see a concise update on some of the key issues from someone with broad business experience, not just of the publishing world. I think I would question the longer term viability – as he sees it – of illustrated books over other genres - it will be very interesting to see if the high quality format of illustrated books will be replaced by digital.. seeing how comfortable particularly younger readers are to read magazine content and view images online, am not sure the illustrated book is as safe as Johnson suggests. The opportunity is to consider how digital can enhance further the beauty, look and feel of illustrated print titles.. take a look at Touch Press titles to see what can be achieved...

Google is open for bookselling

After various announcements and delays, Google's bookstore is now open for business in the US.  Rory Cellan-Jones, BBC technology correspondent, is impressed.  Read his blog post on this here

Key comments:

• 'Booksellers and publishers are pretty desperate to see the arrival of a service which could provide real competition for the Kindle store, and prevent Amazon from building a virtual monopoly in the electronic bookselling market here.'
• 'You can read Google's books online,  in the cloud, or you can download them to read across a number of devices - on a computer, on an Apple iPhone or iPad, on any number of phones or tablet computers running Google's Android operating system. One place you can't read them, of course, is a Kindle. '
• 'Publishers on both sides of the Atlantic have had plenty of run-ins with Amazon over pricing, so they are enthusiastic about another route to the electronic market.'
• Booksellers are enthusiastic because Google is offering independent booksellers a chance to sell e-books through its new service.  Currently, if you're an independent bookseller, it's hard to compete with Waterstones or Amazon on e-books.

Ebooks and the Frankfurt Bookfair

Click here to read commentary on digital publishing and ebooks at the Frankfurt bookfair from Publishers Weekly.

Key points:

• The 2010 Frankfurt Book Fair is embracing the digital future in a wide range of events, panels and workshops
• An ebooks panel of industry leaders noted explosive growth in e-book revenues: e-books made up about 9% of HarperCollins' total revenue - when that number was adjusted to filter out materials not easily consumed digitally, closer to 20% of trade title revenue was now derived from e-books. 
• With print revenues flat, nearly all of the industry’s growth can be attributed to e-books, another indicator of e-books' critical role in the publishing market.
• Are e-books adding incremental growth or cannibalizing print sales? Jury is out on this so far.
• Will the industry standard of 25% of net receipts royalty would change? Some thought not, defending the rate as a fair cut.
• Would Frankfurt Bookfair survive? Did it make sense to travel half way round the world to deal and trade in digital content?  Changes are surely on the horizon, but  it was language rights, not geographic rights, that were traded, suggesting the kind of personal exchanges fostered by the rights centre had a future.
• Pace of change is impressive - at last year's fair there was no iPad and no iBookstore, and the dominant digital theme was piracy. Now e-books and digital are looked at more as an opportunity than a threat. By next year Google will have entered the fray with Google Editions.

Digital sales outstrip hardbacks for first time in US

Amazon US says it has sold 143 digital books for every 100 hardbacks in the last three months.  

Read this article from the Guardian about the growth in ebook sales via the bookselling giant Amazon

This announcement might come as just the sort of bad news that lovers of books (physical objects made of paper with print and a cover) were dreading. Amazon said sales of digital books have outstripped US sales of hardbacks on its website for the first time.

The rate of change is also getting faster: Amazon said that in the most recent four weeks, the rate reached 180 ebooks for every 100 hardbacks sold. Jeff Bezos, founder of Amazon, said sales of the Kindle and ebooks had reached a "tipping point", with five authors including Larsson, author of Girl with a Dragon Tattoo, and Stephenie Meyer, who penned the Twilight series, each selling more than 500,000 digital books. 

Key points and notes of caution:

·         While the volume of sales is impressive and the rate of adoption of ebooks perhaps faster than expected, the value of the books sold in digital format is not equivalent yet to that of their physical format version. Some titles in the Kindle top 10 were selling for as little as 75p.

·         Are ebook sales damaging those of physical sales? Not yet it seems – heardback sales are up 22% this year in the US.  Ebooks now account for 6% of sales in the US consumer book market. 

·         In the UK, the percentage is smaller and the consumer sales (£5m) are still dwarfed by sales of digital content in the academic-professional sector. Total digital sales were c.£150m. There are fewer titles available in the UK.

·         Many people are still waiting for the price of e-readers to come down before making the investment and waiting to see what the impact of the iPad will be on Kindle and book pricing.

E-Book Price Differentials Confusing for Consumers

Here is a link to a Telegraph blog lamenting the pricing structure of ebooks and that there does not appear to be obvious price competition between the formats  and e-readers offered by Kindle and iPad. 

This is something I have blogged on earlier this year and the potential for a captive audience tied to one device being stuck with higher prices than those offered to owners of similar but different devices.  The blog claims that Apple’s iBooks are more expensive – it takes the example of Sebastian Junger’s War. ‘On amazon.co.uk, the hardback is available for £8.49. On iBooks, the ebook costs £9.99...on amazon.com’s Kindle store, it’s available for $11.74, which I make to be about £7.80’.  At least the author takes some solace in the availability of a Kindle app for the iPad allowing access to what he says would be lower priced books but read on the iPad.

Other laments which must be puzzling many potential and actual users of e-readers and ebooks:

·         How could an ebook cost more than the real physical print version of a book?

·         Why should there be such price differentials between Kindle and iBooks?

·         Why can’t it be made easier to share ebooks?

The Times to charge for onine content later this year

The Times and The Sunday Times will start charging for online content later this year. Readers will be offered a week’s subscription for £2, or a day’s access for £1, to two new sites, www.thetimes.co.uk and www.sundaytimes.co.uk.  Existing subscribers to the print editions will be given free online access. International pricing has been set at $2/€1.5 a day or $4/€3 for a week.  Last August Rupert Murdoch announced plans to charge for all the newspapers’ websites. This move was referred to as a ‘defining moment for journalism..’ presumably because bold steps are required to attempt to reverse what has become the accepted model of free online news and to charge a fee for the ‘value’ it represents.

Times Online — which includes The Times and The Sunday Times — has c. 20 million monthly unique visitors. The print edition of The Times has 1.7 million readers and The Sunday Times has 3.2 million readers.

Newspaper publishers are desperate for new business models to compensate for declining ad revenues. In January The New York Times said that it would charge for access to its website and The Financial Times and The Wall Street Journal already have online subscription models.    The New York Times plans to introduce a ‘metred’ model where a reader is charged after accessing a set number  of free articles every month.

The Guardian said it will not charge for online access while certain papers, such as London's Evening Standard has abandoned readership revenue and made print editions free.

The NYT's publisher, Arthur Sulzberger, agreed that the strategy is not without risk: "This is a bet, to a certain degree, in where we think the web is going."  But like many newspapers, the New York Times is in the midst of a financial storm. Its parent company, the New York Times Company, owns 15 papers, including the International Herald Tribune and the Boston Globe, and sustained a loss of $70m in the nine months to September last.  It recently accepted a $250m loan from Carlos Slim, the Mexican billionaire, to strenghten its balance sheet.

For publishers, internet charges are a dilemma.  Online promotions are likely to fall dramatically with the advent of paid for subscriptions, which may make newspaper websites less appealing to advertisers.

The New York Times has experienced difficulties with paid for online access in the past -  some of their well known columnists objected on the grounds that many readers, especially in developing countries, would not be able to afford to read their important content.

Critics, including Arianna Huffington of the Huffington Post, believe charges to access online content will not work because there is already so much free content available in cyberspace. She said last year: "Unless you're selling porn, and especially very weird porn‚ online subscriptions are a dead loss."