On Futurebook.net, the digital blog launched by UK magazine Bookseller, Nick Harkaway just published two insightful pieces on digital publishing. Maybe I think they’re insightful because they speak to my own prejudices, but I do think he makes clear, logical arguments that address some of the more self-defeating behavior of publishers in these unsettled times.

What makes Harkaway’s ideas even more valuable, in my opinion, is that they’re not limited in scope to just the big publishers. Anyone who publishes, including self-starting indies and small niche presses, can and should take note.

Here’s what he suggests, although the paraphrased explanations that follow should be blamed on me:

1. Make your content available. Don’t window the digital release in a misguided attempt to boost hardcover sales; you’re wasting opportunities to sell to new consumers who wouldn’t or can’t buy the hardback.
2. Price wisely and think in tiers. Don’t charge a premium price for a substandard (i.e., typo-ridden or image-lacking) digital version. At the same time, add value incrementally to digital versions so that you can segment them into different price points. First, this will help you give the consumer the option to spend as much as he’s willing to spend (always a good thing for profits). Second, this will give you a way to “window” digital content in a useful way, by letting you release differently priced versions of digital content to correlate with the traditional release schedule.
3. Don’t cheat customers. Harkaway doesn’t quite use such strong language–he says customers don’t want to pay twice for the same content. But ultimately it comes down to feeling cheated as a consumer: if you paid for something, you don’t want to have to buy it again, and then again, each time you want to consume it on a different platform. Here’s an idea: if you really do want to charge a consumer on a per-platform basis, then you must drop the price to a “rental” level as an acknowledgement of how limited the access is that you’re selling.
4. Skip DRM. It adds cost to your production budget. It creates potential situations where your customer will feel cheated. It’s arguably ineffective. The people telling you that you need it are frequently the ones who are selling it. Most of the arguments for it are based on emotion, not business intelligence. If it’s too late for you–because there are higher-ups or board members who insist on it and are too slow/scared/suspicious to try something new, then at least start pushing for an exit strategy.

“DRM is not all that” [Futurebook]
“The Rules Of Harkaway Club: everything I think I know about ebooks, but probably don’t” [Futurebook]
www.nickharkaway.com

The Bookseller notes today that authors and their agents are struggling with publishers over just how broad a reach current contracts should have when it comes to ebook rights, particularly so-called “enhanced” ebooks that contain content that’s not available in print.

Some publishers–Hachette, for example–want everything; authors and their agents want to divide it up so that they can negotiate more precise, and potentially more profitable, royalties. Here’s how agent Jim Gill of United Artists puts it:

He said while some basic enhancements might be covered by an existing grant of ebook rights, “beyond that we’re talking about very sophisticated products which don’t resemble at all what we’d all understand to be ‘a book’ licensed under a volume-rights agreement”. Gill added United Agents would “no sooner naturally sell those rights to a book publisher than we’d sell them film rights.”

I’ve grown increasingly less convinced that existing publishing cabals are capable of being leaders in yet-to-be-developed digital publishing platforms or formats.

If the history of commerce on the Internet is at all predictive, then we probably have a good ten years before big publishers bring the right big guns to the fight and suck up the majority of the market. That leaves a lot of time for disruptive newcomers to transform the marketplace significantly enough that they emerge as permanent and powerful market leaders. See: Amazon this past decade.

Plenty of authors don’t want to worry about the business side of writing and publishing, which is why agents and publishers exist of course. But I’d caution any writer to hold as tightly to undefined rights as possible and to keep it out of a publisher’s hands–not so you can negotiate higher royalties down the line, but so you can experiment rapidly with new digital distribution methods without being hampered by slow-to-react corporations.

“Agents and publishers grapple over ‘enhanced’ e-book rights” [The Bookseller]

(Photo: einalem)

Penguin Books’ CEO John Makinson gave a presentation in London today where he demonstrated some books/applications–I’m not sure what you’d call them technically–that Penguin plans to sell on the iBook store when the iPad launches later this month. Penguin is doing some pretty inventive stuff with its content, judging by these demos, and I think it points a clear path toward how publishers can provide new offerings that printed books can’t match.

Included in the demo:

- A children’s book that includes interactive activities for the reader: at one point, the child may be asked to help the main character color in a picture before swiping to the next page of the story.

- A reference book based on DK’s The Concise Human Body, where users can tap illustrations to zoom in for a detailed view, then tap again to transition to animated 3D models.

- Networked, community-driven editions of books from the Vampire Academy series, where a reader can both read the book and interact with other readers.

- Travel books that allow readers to develop itineraries and make use of interactive maps.

- An astronomy book that uses GPS and the iPad’s motion sensor to display constellations that match up with the sky above you.

It’s all quite impressive–I especially like the Vampire Academy books, which allow you to read the book traditionally but also extend your level of interaction through a built-in, attractive social network interface.

Makinson suggests that the ePub format can’t handle some of the more advanced content they’ve come up with, so the publisher is planning on releasing apps in many cases. I think this is one area where publishers can claim a huge amount of revenue in the digital book marketplace; it’s a lot harder for an independent or writer to develop a high-concept app than it is to self-publish a “traditional” ebook, and I suspect customers will gladly pay significant amounts of money for books that do more than just display text.

“First Look: How Penguin Will Reinvent Books With iPad” [Moconews.net]

When it comes to ebook pricing, I’ve changed my position on the matter almost weekly; sometimes I side with publishers, sometimes with retailers, sometimes with consumers. But I think this week I may have finally realized something that forces me into a more permanent point of view on the matter. It’s this:

Most publishers, in fact, are trying to intentionally slow the uptake of ebooks by consumers. I think that’s what the whole pricing issue is really about–driving away customers as much as possible, because ebooks don’t easily fit into the existing business model of the average publisher.

Last week, an industry insider circulated talking points among publishing types, instructing them on how to frame the debate in the media in order to convince consumers to accept higher ebook prices. This in itself is offensive–if your approach to innovation is to act like a political group, and to deliberately strategize how to abuse language so that you can confuse the issue, you’re sending a clear message that you don’t want to have an honest conversation with your customers.

In response, I posted a piece on Consumerist.com that explains the issue in plain language for publishers: if you want to raise prices, make the ebook worth the price. It’s that simple. Add value, raise the price.

I also pointed out four things that publishers should take under consideration immediately, instead of memorizing talking points:

• Stop calling consumers cheap; they want fair value.
• Stop hiding behind industry inefficiencies. Innovate.
• Stop asking consumers to trust you; demonstrate that you want the ebook market to grow, or be honest and admit that you don’t.
• Stop saying lower prices will destroy author incomes and modern culture; it derails any meaningful discussion.

Most complaints you read from publishers commit at least one of the above four sins. Why, take a look at this email I received from a publisher earlier this week when I suggested that she might sell more copies of a novella (a novella!) if she would price the Kindle version lower than $10 on Amazon:

What I think consumers don’t understand is there is still a decent amount of cost & time we as publishers have to put in to offer a book on Kindle (or B&N, etc.)…So, it wouldn’t be fair to us or the author to charge much lower. All publishers struggle to make ends meet and the majority of our authors certainly aren’t making a living off their book royalties, so for this reason I don’t think we can discount books — print or ebooks — any further.

Look at that: she implies Kindle customers are being cheap (as opposed to asking for fair value), she blames the industry for barely being profitable as it is, and she says authors won’t be able to make a living. Three in one paragraph!

So I finally get it. When publishers say they want to maintain a competitive marketplace, or they don’t want ebooks to cannibalize print sales, or they need to recoup the cost of publishing, what they’re really saying is simply: we want to make sure ebooks don’t take off, because we have no idea how to make that work within our current business model and we’re reluctant to try to innovate.

What they’re not saying is that they’re taking authors or readers into consideration. There may be a more profitable model out there for publishers and authors–one that includes lower prices for consumerst, in fact–but it won’t be discovered by one of the existing big companies. And the next time you read a publisher’s complaints about ebook pricing, make sure you’re not just being fed talking points.

“Consumerist: If publishers want more money for e-books, they should offer something worthy of the price” [Consumerist]

RELATED
Read more comments on this topic at the following two posts:
“Consumerist: If publishers want more money for e-books, they should offer something worthy of the price” [Teleread]
“Book Publishers Circulating ‘Talking Points’ To Counter Arguments That Ebook Prices Need To Go Lower” [techdirt]

(Money photo by aresauburn™)

This whole issue of how ebooks are priced, what they’re worth to consumers, and how to make money off of them is actually pretty complicated. It’s also fascinating, at least to someone like me; for the first 18 months after I bought a Kindle I demanded that no publisher ever go above the $10 mark. (I’ve since softened my stance somewhat for new releases, although personally I don’t buy ebooks over $10 regardless.)

Two of the best explanations I’ve found come from published writers who have an obvious interest in what Amazon and publishers end up doing:

Read “Amazon, Macmillan: an outsider’s guide to the fight” by Charles Stross

Read “Why my books are no longer for sale via Amazon” by Tobias Buckell

Bonus! Read “Kindle Numbers: Traditional Publishing Vs. Self Publishing” by Joe Konrath for an alternate take on earning money from ebooks if you’re a midlist writer.

Set aside 10-15 minutes and read these two (or three) guys for some great insights, for example on Amazon’s reasons for holding to the $10 price point (hint: it’s not really for our benefit), on how much it costs to publish a high quality ebook, and on how to price more efficiently to take advantage of what different customers are actually willing to pay (hardcore fans are usually willing to give more support to their favorite authors).

This post originally appeared on Kindlerama.

(Photo: kretyen)