Needless to say, the ensuing discussion has been awesomely full of punditry and speculation. Thus, me! If I do not offer my two cents, then I will surely be kicked out of future publishing cocktail parties. After all, I must have thoughts on this madness.

So where to begin? I am presuming Eisler made a calculated decision, one that factored in the very real loss of worldwide print sales (wherein I completely agree with Mike Shatzkin on this point). Oh sure, there are ways to compensate, but this is not a trivial business choice.

On the other hand, Hocking is likely looking at those same worldwide print sales and realizing there’s money in them there books. The two authors are looking at the same worldwide market and taking different approaches. One is a seasoned author, the other is just now realizing her potential.

So who is making the right decision?

Both.

Yeah, that’s a helpful answer. Bear with me.

Eisler has an established fan base, and he can tap into a growing network of indie authors who are, for lack of a better concept, forming their indie marketing circle. This is not a new concept. It’s the way indie romance authors — those digital-first (or digital-only) authors — have built careers for the past decade. History has shown this works for some authors.

I think of it as a numbers and talent game. Only a few authors truly rise above the pack. It’s like real publishing, only with more control. However. Any author who goes indie has to become an end-to-end business. Writing, editing, production, distribution, marketing. Oh sure, some of these can be outsourced, but the author must be on top of all these function. Cannot let any one of them slip.

Just as few employees in corporate jobs have the ability to be management and worker bee, few authors have the skills to be everything and more. The authors who seem to do best have what can only be called an entrepreneurial spirit. My belief is that writing is a creative process; being an author is a job.

And it’s not an easy job. This is why I believe Eisler calculated more than a few odds. One does not walk away from a purported $500,000 easily. As many smart people have noted, you don’t go into publishing to get rich.

What Barry Eisler has going for him is control (not to be underestimated), speed to market, the ability to experiment, and instantaneous worldwide digital distribution. This comes into play in our next section.

Now back to that other hand.

Hocking has, and I think you’ll know what I mean, tapped into the Twilight zeitgeist. Something I’d note no major publisher (or minor) has managed to do. I have not read her work, but know more than a few people who have. Clearly she can tell a story that engages readers (not an easy skill!), but there is a consensus that she needs more editorial oversight. I believe in editors in a big way, and know that good editors make a story so much better.

Hocking has also, conservatively and based on news reports, netted well over a million dollars (before taxes, those pesky things!). That is serious money in publishing. I know people who’d sell their souls for that kind of publishing money.

It’s also hard money for publishers to meet. This is an author who is accustomed to making seventy cents on every dollar. Used to getting paid monthly. Used to freedom.

Yes, she’s only reaching a fraction of her audience. Print remains the dominant worldwide format, and, while digital is growing like crazy (a key component of Eisler’s calculations), ignoring any part of the publishing marketplace is something one must do with extreme intelligence and caution.

Can print publishers offer her at least as much as she’s making as an indie author? It’s easy to throw money at the problem. But is it as easy to throw money at the success?

I said I think both Eisler and Hocking are making the right choices, but, if you were to corner me in a bar and ask me which author is following the right path right now, I’d say Eisler.

He’s taking a riskier path, for sure, and there is no guarantee. His history suggests he has some talent when comes to calculated risks. And while he’s burned some publishing bridges, he also has a track record in the industry.

Hocking, however, is more of a publishing dark horse. She’s done the indie thing amazingly well. I cannot over-emphasize how critical this is, and how well she’s done it. But there is a gap between indie publishing (especially self-publishing, without a lot of professional editorial input) and corporate publishing.

The biggest challenge, and the reason I’m putting my money (virtual because the husband hates it when I bet cat food dollars) on Eisler is that the publisher who signs Amanda Hocking today will likely not have a book on the shelf before 2012, more likely 2013. Note my nouns.

The Hocking zeitgeist is right now. Her audience is right now. Her moment is right now. Can this buzz be sustained a year or more? Can her audience be engaged for that long? Yes, if she’s continually giving them the books they want…at the price point they want.

Will the Amanda Hocking audience pay $9.99 for her books? This is not an idle question.

Can publishing capitalize on an Amanda Hocking? This is a serious question.

Note: Sarah Weinman, wisely, questions my belief that Amanda Hocking will lose momentum. I did consider Sarah’s arguments while writing this, but felt then (and sorta feel now) that two things will slow this phenomenon down. The first is the competing works clause in an author agreement. The publisher Hocking presumably will eventually sign with (how’s that for confidence?) will surely balk at any works they deem “competition” for their own release. How Hocking works around that and pleases her audience becomes a challenge.

The second hesitation I have is that publishing a book is a lot of work, and even the most seasoned writer finds challenges in undergoing the full editorial process on one book while creating new works. Once Hocking is assimilated into the traditional publishing machine, there will be a constant flow of work for the series she’s creating for that publisher, and I worry it will come at the expense of her indie work.

Let’s start at the beginning: what is Publishr?

Publishr is many things, but first and foremost it is a blog containing a collection of essays about the future of the publishing industry as we forge ahead into what many see as uncharted territory.

Right now our industry is going through a transition from a primarily print business into an integrated business with both print and digital businesses. Yet, I saw a lot of houses entering the digital market with business plans based solely on their print business, or something eerily similar to business models that were predicated on producing a print product to sell in a bricks and mortar retail location. While this worked (more or less) for print books, I found it ludicrous that only a few were speaking out about creating purely digital business models or, at the very least, models that allowed for a digital focus which make sense for moving into the future of our industry.

In the transition that our industry is going through, there are a few steps I see happening:

1. Production of a large amount of eBooks with little regard for product quality or user experience in order to be represented in the marketplace.
2. Learning from and about the production process, eBooks in the market as well as industry “best practices”.
3. Production of second wave eBooks, with more attention paid to user-experience and quality of conversion. Addition of more devices, market expansion.
4. Learning from second wave of products in market.
5. Production of third wave eBooks, refined further, device functionality starting to be taken into account, metadata and technical strategy begins to show up on radars.
6. Learning from third wave of products in market.

Publishr strives to be at the 7th position in this (very crude) spectrum: anticipating what we’ll learn from the latest technology and then attempting to venture yet another step beyond what we perceive as the realm of current possibility.

Though they’ll likely change over time, what are your goals?

Right now, I’m focusing on establishing a foundation of quality writing about the publishing industry that covers as many topics as possible, offers solutions to future problems, and essentially, sets out a path for successful transition from a print to an integrated digital business. While I do think there is more than one way to do this, I am providing one such roadmap that I feel is entirely feasibly while still forward-thinking and adaptable.

In addition, there is the newly announced Publishng project through which we will be publishing an eBook and discussing the process throughout in a completely transparent way. The focus of this project is on learning through hands-on experimentation.

Ultimately, I would like to create a dialog about the transition in our industry as well as anticipate the challenges which will be facing as we move forward. Overall, Publishr is decidedly utopian in tone and aims to provide a positive, yet serious, look at the future of our industry from within.

What kind of business model are you envisioning?

While there are many business models that could function in the digital publishing space, I have personally advocated for one based on agility and modularity. I like to call it the XML business model because it would mirror our content, our workflow and our entire overarching structure.

Let’s say, for example, a publisher purchases or commissions a piece of content. It is then decided that this content will be divided, purposed and repurposed, chunked into several products, which may or may not include eBook, smartphone app, print book, audiobook. It may have transmedia integration with audio or video components. Each of these, as well as any bundles of these, requires a separate ISBN. Right now, regardless of what the content becomes, we have one way of treating that content, which is a model based on the content-to-print paradigm. The XML business model would allow for all of these separate products, and any iterations thereof, to have an exact model that fits to each particular situation.

“Print book”, being one of many iterations of what content could become, would have a module. This module would contain information pertaining to the royalty structure associated with a print product, pricing information for a print product, delivery and distribution models for print products, and most importantly how it interlocks with or relates to other modules. The same would exist for eBook products with separate royalty information, separate pricing information, separate distribution models. And apps. And audiobooks. And transmedia components. And those things that don’t yet exist, they would get modules in the future, as well.

Then, going back to the decision of how to chunk content, by simply interlocking, say, a print book module with an eBook module and a video component module, you have a working business plan customized to this multi-faceted products. While similar, it would not be the exact same as, say, content that was destined to become an eBook, audiobook, and app, with no print component. And, since the modules will work independently of and in tandem with each other, any combination is possible.

Right now, I feel there is a disconnect between agile workflow with movable content and rigid business structures that worked better for a p-only world. The digital landscape of today would have been, in many regards, completely unrecognizable to us just one year ago. Why wouldn’t we think this would be the case a year from today? In other words, there will be new devices, new products, new methods of delivery and production which will need to be integrated into a business model which is, currently, rigid. Instead of having to rewrite the rules of engagement every year, I believe a modular business that allows for adaptation and integration of new items is the way to go.

What kind of author are you looking for?

Ideally, I would love to find someone with the chops to stand up to the New York Times Bestseller list, for example. It is a high standard, but I feel it’s important to aim for the top and hold out for quality.

Beyond that, it is incredibly important that we work with an author who understands the digital landscape, who is willing to experiment, and who is also eager to promote and dig in to help with marketing and publicity both online and off. I don’t want to jinx it, but I may have had the right project fall into my lap just last night.

Is there a particular genre/style of book you are seeking?

We are focusing on serious literary fiction and narrative non-fiction.

What is the timeline for publishing (publishng?) your first book? How books per year do you envision publishing?

Right now, I am still working on establishing the best team of contributors so we can hash out a workflow and timeline together. So far, I have had tremendous response and am very excited about working with a veritable dream team of people in digital publishing.

At the moment, we have no plans on publishing more than one title. In fact, I don’t know if what we are going to do can be recreated, nor would I necessarily want to be responsible for the infamous sophomoric effort.

As it is conceived, this is an exercise in building the future by moving things forward. Too many still think we can simply adapt our print models for a digital world. And, too few seem to fully embrace the opportunities that a digital-first mindset can allow. Publishng is that opportunity, to go beyond current best practices and to make a difference in this industry. To show that money is not the solution to complex problems, and to explore new business modes that may be impossible in the stricter confines of a big publishing house.

In addition, we are committed to building this future in a completely transparent way so we can all learn about the process together and move on to a better place regardless of what house we work for or where our allegiances lay.

Finally, Publishng is an opportunity to stop talking about digital publishing in a vacuum and to apply the principles of what is discussed in the essays we publish on a weekly basis. It’s putting our proverbial money where our mouth is … except that very little real money is involved.

Is there a Publishr team? Who, what, why, how?

A group of people have been approached to write posts for Publishr. So far, Jane Litte and Laura Dawson have written wonderfully thoughtful pieces. I am both incredibly grateful for and proud of these contributions. I am also excited about upcoming posts from people with all different points of view. We are open to essay submissions, as well, by simply emailing publishr [dot] mag [at] gmail [dot] com.

As for the Publishng team, there will be an announcement very soon, but I am not ready to spill the beans just yet.

You can follow Brett on Twitter: @bsandusky. Keep up with the progress of Publishr’s first book at Publishr.tumblr.com.

I don’t believe it is true that everyone wants publishing to leap into transmedia storytelling. If every story were multi-arc, multimedia, multi-point of entry, multi-everything, that would be akin to a diet of all reality television all the time. Not every story or idea can — or should! — support a multi-pronged existence. The definition of transmedia storytelling — storytelling across a variety of platforms (text, video, audio, chalk messages on buildings) — requires a story that can be told in a way that seamlessly blends technology and story. It needs to be immersive and believable at every point of entry.

We’ve seen transmedia thrive in conjunction with television programs. Lost, in particular, does this very well. On the other hand, NBC often takes an intrusive approach that makes it clear the extended story is part of a marketing effort, not a storytelling effort. I’d go so far as to say the urge to brand everything may very well kill certain aspects of transmedia storytelling.

There are many reasons why publishing hasn’t moved rapidly into the world of transmedia storytelling. The creation of a multimedia experience takes away from the core business of publishing books, however you define the term. There is a very legitimate question about what separates book publishers from motion picture or gaming studios once the move into transmedia storytelling is made. I am not sure how to begin to answer that question.

And for all the buzz about “enhanced ebooks”, it is early days yet. Everything from what book readers want to how to pay for these extras is on the table. There is a huge difference in what a production that has a multimillion dollar budget (such as a television series or feature film) can do versus what publishers, who do not necessarily have the in-house skillsets or budgets to fully explore transmedia storytelling. Yet I still expect to see a fair amount of experimentation coming from publishers large and small in the coming year.

As I see it, beyond reader adoption, there are three major hurdles publishing must overcome first: rights, business model, and technology and skills.

• Rights: There is a lot of trickiness in this area alone. In most cases, authors own their copyrights, and when publishers want additional content from those authors, the authors naturally want additional compensation. While I’ve heard stories about agents going directly to transmedia production houses (for lack of a better term), relatively few authors will be willing to part with their own money for what is currently a risky venture.

  Figuring out how transmedia storytelling fits into the world of publishing will require a lot of experimentation. There will be more failures than successes. To me, this means experimentation on the part of authors and agents and publishers as well. Of course, authors should be paid for their work, but the experimental nature of what is being done needs to remain at the front of everyone’s mind.

  Then there is the issue of territorial rights. Some publishers acquire all rights, worldwide, and those are the lucky ones, from the perspective of creating new kinds of story options from the underlying work. When the rights are parsed out far and wide, putting the together the infrastructure for a well-considered, well-developed story. Territorial rights may prove to be the largest obstacle to success in transmedia storytelling.

• Business Models: While we’re seeing companies that focus on doing high-quality productions within the publishing industry emerge (looking at you, Enhanced Editions!), the business models for transmedia storytelling and/or enhanced ebooks are still being built — and there will likely several. Right now, the industry is still in the very challenging position of defining “enhanced” when it comes to ebooks. As you might have guessed from this post and my previous look at this topic, I come down very much in favor of creating products that take the story in a new direction rather than trying to tack marketing materials (the ebook equivalent of DVD extras) onto the book.

  Did I mention that there will be much experimentation when it comes to transmedia/enhanced stories? Have I mentioned that this is a good thing, as long as it doesn’t come at the expense of the core business, which is producing quality books (and ebooks)?

• Technology and Skills: Fact: not everyone will own an iPad. There will be tons of new devices emerging in the next few years. But the fact is that the major platform for delivering content to people is being overlooked. Yep, we already have the Web. It’s proven to be a very good publishing system, and, frankly, the least expensive, widest reaching platform available. While gadgets are cool — oh, are they cool — don’t forget how people really interact with content today.

  I am heartened by the various publishers I know are hiring staff with the kind of web skills necessary to move into transmedia storytelling. Other skills include community building/management, creation of serialized content, world-building (the core of transmedia storytelling!), multimedia production, and project management. This is not even factoring in the authors. These various roles must function as a team.

  For some stories, success will drive the creation of enhanced media or editions. When it comes to building a transmedia experience, I believe it is best to start from moment one, thus allowing the entire team — author, editorial, production, marketing — to develop a smart, compelling story. The story needs to be built out and infrastructure developed (you cannot, for example, launch a new website on release day and expect Google to make a sandbox exception*).

  A great example of new media storytelling ventures is The Amanda Project from the very creative Fourth Story Media. “Amanda” works because the vision was well-developed and smartly targeted at the core audience. While projects can (and maybe should!) remain flexible, ready to move as the situation dictates, a cohesive, start-at-the-beginning development process is the key to success.

  And it is where publishers can shine. As stories and ideas come across the transom, identifying and developing the right stories for the transmedia market can happen early. This allows the entire team to develop a strategy, including compensation, from the beginning.

For me, treating a story as a transmedia experience is a function of serving the needs of the story. Some practically beg for extended, expanded lives. Others function far better in the traditional narrative manner (be it text-based or audio).

* For those unfamiliar with the Google sandbox, it is a process where newly launched websites are left to season before they are indexed by the search engine. This helps prevent spam sites from taking over search results. While there are many variables, conventional wisdom has a site sitting in the sandbox for approximately six months. Plan accordingly.

Consumer expectations will rise if prices do

Over the weekend, we rode a rollercoaster as Macmillan laid out its demands for ebook pricing to Amazon, and Amazon responded by pulling (nearly) all Macmillan titles from its store. Late Sunday, Amazon announced they would “capitulate” to Macmillan’s demands on pricing. It almost goes without saying that this will be the go-forward model for all major publishers, and maybe their independent brethren as well.

Publishers have gotten what they want.

Man, it seems like a victory doesn’t it? In a way it is. I’ve been of two minds on this topic since the entire concept of the “Agency Model” was announced (rough definition below). Setting aside the fact that it’s still opaque to parties with a vested interest (authors, agents, even other retailers), I have a natural aversion to wholesalers (book publishers) forcing prices on retailers (Amazon, et al). I believe price is an important tool in the arsenal of retailers. And, as a consumer, I’m not yet willing to pay more for the vast majority of ebooks being released today. More in a few paragraphs.

On the other hand, I love that this approach (finally) levels the playing field for all retailers. Sort of. Some have argued that this battle is not about DRM, but it is all about DRM. DRM is the tool retailers use to lock in consumers. Amazon does it. Sony does it. Barnes & Noble does it. Apple does it (or rather will, in the case of books). Every retailer who has a device has a proprietary DRM scheme. And publishers encourage this. They demand DRM.

These DRM schemes lock other retailers out of the devices. They allow companies to dominate the marketplace. Why would I shop IndieBound when I can’t load the books on my preferred device? Ah, the battles on the horizon! It’s going to be a bumpy year.

And…there is a lot more elasticity in ebook prices than has been acknowledged or realized. Macmillan is talking about pricing books in a (yet-to-be-revealed) dynamic manner, ranging from $14.99 to $5.99. As Macmillan has not previously been a good actor in ebook pricing, this news is heartening. This seems like an attempt to map the existing print marketplace to the digital marketplace, when now is the time for more creativity and thought when it comes to ebooks, content presentation, and pricing — and yeah, that does mean considering higher prices (I am not contradicting what I said about what I will pay).

Publishers have made bad arguments when it comes to ebook pricing. They confuse in-house value (often based on the price paid for the book) with consumer perception of value. Now these publishers who once hid behind Amazon — seriously, I’ve had publishers blame Amazon for crappy formatting when it was clear the underlying file was the problem — will have to stand behind their product. No. They will have to produce better quality books.

This means both from story and production perspectives. It doesn’t appear publishers will make more money from retailers under the proposed Agency Model, but consumer expectations will rise if prices do. There will not be additional margin — at least not significant additional margin — to play with, but publishers will be held to a higher ebook standard.

In my Publishing Perspectives article last week, I discussed the importance of getting basics right (in a “we couldn’t have done better if we’d coordinated it” moment, at Digital Book World, Liza Daly did a live presentation on this at well). During the skirmish between Amazon and Macmillan, I happened to be reading a Macmillan ebook, and the errors were like speed bumps. I cannot tell you how poor formatting pulls me out of a story (this goes for print as well). Quality is going to make a huge difference if publishers want to convince readers to pay more.

And this quality will be even more critical for books purchased via Apple’s bookstore. The display will not be forgiving of books with poor formatting (nor will the customers who buy the books). This is what publishing has been asking for, they have it, what happens next? And will the Agency Model be enough to cover innovation?

For those wondering, the Agency Model, as reported by Publishers Lunch, is roughly (registration required for link):

Though initially resistant to a new paradigm, by multiple accounts Apple has agreed in principal to do business with publishers under what is called the agency model–as opposed to the wholesaling model currently in place for ebook sales and most physical book sales. In the agency model, the publisher is considered as keeping possession of the actual goods (the ebook files) and it pays a commission to its authorized selling partners. So the publisher sets the retail price of the ebooks, and the commissioned agents have no ability to change that price. Ebooks sold under the agency model would be offered to any established trading partners who agree to the commission and other particulars.

I call this scan based trading, publishing style. Certainly, there is far more to this than described. First off, it hews awfully close to the description of direct sales. Then again, it’s hard to imagine major retailers allowing publishers to “keep possession” of files — publishers simply don’t have the fulfillment channels in place, and shouldn’t. I’m not opposed to publishers selling direct from their websites, but that’s a whole different type of infrastructure.

It’s all a bit fuzzy at this point. Agents are still wondering what this means, which means authors are wondering what this means. More specifically, how this new model maps to their existing (and future) contracts. Mike Shatzkin explores this as well in his post about this story.

So what does all this mean? I imagine the next huge debate will be between agents and publishers as the new model is mapped to real money for the people who write books. Other retailers will be demanding similar terms to Amazon (and perhaps breathing a sigh of relief). Consumers will be sniffing at the new pricing model and voting with their dollars (one doesn’t have to read between the lines of Amazon’s statement to know where the retailer hopes this ends). DRM will remain on the horizon.

Oh, and independent publishers and independent booksellers and individuals will be clamoring for equal treatment.

Fasten your seatbelts…

Longer answer: the magic elixir publishers are injecting into ebooks in hopes they will entice people to pay higher prices.

As you might guess, I am a bit of an “enhancement” skeptic. I have a few reasons. First, they feel like an attempt to skip the walking phase. Right now ebooks are crawling, technical quality-wise, and enhanced ebooks will be (theoretically) leaping and pirouetting. Second, what is being proposed in some publisher statements sounds a lot like standard print material (reader guides) and marketing fluff. Finally, I’m not sure readers are clamoring for enhanced ebooks as much as they’d like publishers to rethink what a “book” is.

First, let’s talk about the technical quality. We could debate the quality of content and editing until the cows come home. We could restart the debate when the cows go wherever cows go when they’re not home. And so on. I believe publishers too readily dismiss reader comments about bad books, value, and price; it hurts the publisher argument because it’s not the job of readers to make the right format and pricing decisions. That’s a discussion for another day.

What I’m talking about is the actual ebook. How it looks, how it flows, how it works for readers.

Right now, most commercial ebooks are treated as exact (but not really exact, which is a problem when it comes to value perception) replica of the print version. Right down to nonsensical elements like references to page numbers within the digital text. The process of taking the final print layout and converting it to an ebook ignores the basics of ebook creation. It cheapens the product sold to readers.

It seems that publishers have been seduced by outsourcing and are neglecting the basic production tasks that are required for ebooks to actually become working books. Readers lack the visual clues of print to guide them; it’s the job of publishers to figure out how digital books can be presented, from better, more logical tables of content and indices to content flow that makes sense (we really don’t need all those breathless press clips about how great the author is…since we’ve already bought the book).

Basics. Get those right first.

Then comes the “enhancements” that really aren’t. Way back in December of last year — oh so long ago! — Macmillan announced a genius plan to sell enhanced ebooks. Naturally, being a publishing company, this meant selling ebooks for higher prices than the hardcover print books:

The special editions, which will include author interviews and other material, such as reading guides, will carry a list price slightly higher than the hardcover edition.

Sigh. Big fat sigh. So silly additional materials of questionable value, materials that are commonly included in the trade paperback version of books will now be added to ebooks and the price will go up? I can only imagine the gleeful rubbing of hands and diabolical cackles that accompanied this announcement. “Take that, Amazon! We’ll add crazy value to those ebooks. People will go nuts for…reading guides!”

These are not enhancements. These are marketing materials. If you, the publisher, cannot distinguish between the two, it makes my heart hurt. Remember point one about the basics? Go back, review that, take notes, ask yourself how you can make the actual ebooks you’re publishing today achieve the same level of quality as the print books.

Note: stop pretending print is the “real” version of the book. That kind of thinking doesn’t help you. Especially as we move into point three.

Finally — and setting my overall skepticism aside — we come to Unicorn. Yesterday, the Internets were abuzz with word that HarperCollins was talking to Apple about…something (By the way, if publishers weren’t talking to Apple, that would be news. It’s fracking January 2010.). What were they discussing? Oh right, this:

Brian Murray, the chief executive of HarperCollins, said in December that e-books enhanced with video, author interviews and social-networking applications could command higher retail prices for publishers than current e-books.

What would be more interesting, truly interesting, would be if Murray had said something along the lines of, “We are taking a hard look at how we package and sell our products, and will be rethinking how we publish certain types of books.” Setting aside the fact that we already have the technology to do amazing things with video, author interviews, and social networking applications — it’s called the “web” — there are many books that could easily command higher digital prices by providing more consumer value.

(I am speaking on this very topic at next week’s Digital Book World, with real-world examples!)

Publishers Lunch reports that what is actually emerging from the Big Six negotiations* is an “agency model” which allows publishers to set their own prices while Apple takes a commission (reg. required for link). It sounds a lot like the ebook version of scan based trading, where retailers don’t actually purchase inventory, taking a cut only at point of sale.

(I’m going to say this approach, in theory, is a good thing for all retailers; it makes no sense to “buy” an ebook, hold it in virtual inventory, then “sell” it.)

This may change tomorrow, the situation is apparently very fluid, and it’s not going to significantly impact the market shares of other book retailers, Amazon, Barnes & Noble, and Kobo, unless the publishers offer a superior experience to their customers. The existing retail leaders have the advantage of multiplatform strategies.

Done right, video and other elements can be great complements to books, but it has to be done right. The Publishers Lunch article linked above expands on Brian’s Murray’s comments, suggesting at least one publisher is taking a hard look at the value proposition, using real-time updates and information to expand the work. This would only work for certain books; Murray speculates about the possibilities for a book like Game Change, saying, “In my opinion, this type of consumer experience has value equal to or close to the value of a hardcover book – or more than twice the consumer price of current ebook bestsellers.”

A few months ago, I suggested that had Twelve released a truly enhanced edition of True Compass, taking advantage of a multimedia approach to tell the story of Ted Kennedy, the possibility for charging more than hardcover price existed. Granted, some licensing fees for the media would change the economics, but the idea of making the digital book more than a replica of the print is where the value aspect will take hold. Michael Cairns of Personanondata offers his own take on this concept.

Still the other aspects of the digital book have to be done right. Did I mention the importance of focusing on the basics? I’d feel so much better about these propositions if the foundation of ebooks were more solid.

Bottom line is that we already have the technology to “enhance” books and publishers aren’t using it. I am not sanguine about the idea that millions of people are going to shell out a purported $1,000 merely to read books. They’ll be purchasing a new type of multimedia machine, and reading books will certainly be done on the Unicorn. The device is a tool, not a cure-all. Targeting the, take a breath, iPod/iTouch/iPhone/Unicorn consumer is, well, targeting a niche. Whatever happens in the world of enhanced ebooks, it has to happen in the world of Android. On the real web. In the entire mobile space.

And it has to be truly valuable, not some marketing person’s notion of value.

* – Nice of six companies to try to set the table for everyone else, no?

Successful digital publishers have been largely limited to genre fiction, romance in particular (to the best of my knowledge, and I know I’ll be corrected on this point!) because there is a significant portion of the readership that is comfortable being an early adopter of technology. The business model has worked because the participants involved understand the risks and rewards. As I’ve noted more than a few times, this model has been evolving for well over a decade, and will continue to evolve. And, as you’ll see when you get to my final point, it’s undergoing the same sea change the rest of the industry faces.

Over time, there have been failures big and small in this marketplace. The reasons vary. The successes all have elements and principles in common. Not surprisingly, most of these principles have to do with cost effectiveness and economies of scale. I’d like to thank Angela James, who has, over the years, written and spoken extensively on this topic. Some of my thoughts and conclusions may vary from hers, and I defer to experience.

• No/Low Advances — Cash flow, especially in the beginning, will be tight. And while there is a strata of author who will not work with you if you don’t pay advances, there are many excellent authors who, for various reasons, including creative expression, will. But the publisher needs to keep some key promises, outlined below.

  By the way, over the years, I have heard every argument under the sun for and against the no-advance model. I’ve seen authors refuse to consider this alternative (while spending years trying to sell a manuscript that traditional publishers won’t touch, and not because of quality or talent). I’ve seen an organization engage in an at-least annual battle over this stance. And I’ve seen authors succeed, to the point where traditional publishers with fatter checking accounts are not necessarily enough to convince the authors to give up the benefits of writing for a digital publisher (and yes, most compromise by writing for both).

  I believe every author should weigh options and make the right decision for his or her career.

• Higher Author Royalties and More Timely Reporting — Royalties in this marketplace are generally higher, starting at 35% and increasing. This probably gives many in the publishing industry hives, but it also makes the author an active participant in her book; at the very least, it acknowledges the author’s role in the writing and marketing of the book. Both sides are taking a risk, and both sides share the rewards of hard work.

  Just as important, from my perspective, is the shift in royalty reporting. In the 1990s, it was possible to get a manual distribution statement from Djibouti faster than for a traditional publisher to report sales to an author. That is still the case. Semi-annual statements with 60- or 90-day reporting lags are relics of days gone by. In the digital publishing world, royalties are paid, at the latest, quarterly with a 30- to 60-day window. Many are paid monthly.

  Part of this is the difference in money flow. If you look at it on a per-book basis, it takes a long time for hard dollars to get back to the traditional publisher. Cash for digital sales (and note my use of cash) gets to the publisher much faster, certain laggardly retailers notwithstanding. Paying authors in the most timely manner possible is part of the compact. Authors note they’ve written, published, and been paid royalties for ebooks in the time it takes to get the second and third tranches of their advances from bigger publishers.

• Completed Manuscripts — In traditional publishing, it is not uncommon for a house to go to contract based on a proposal or even idea. At some point, an advance check is written and the waiting game begins. It’s one of those time value of money things. The longer it takes to get a manuscript completed and available for sale, well, you know.

• Faster To-Market Time — One of the key reasons authors love advances (other than the it’s guaranteed money that they can’t take away from me not matter how my book does aspect) is that it’s the only money they might see related to their book for years. Publishing is a slow business, and the timeframe from acquisition to book-on-shelf can be stretched beyond the patience of ordinary humans. The digital publishing production frame is compressed.

• Shifting Participants — This is going to make some people cringe, and I admit it was one of the harder aspects for me to wrap my mind around. Many digital publishers started as, for lack of a better term, mom-and-pop operations. As they grew, additional staffing was required. On the minus side, these publishers did not have the benefit of fifty-plus years of backlist to finance ongoing operations.

  Finding quality editors was a priority, paying them top dollar was not as easy. A few standards emerged, with two basic ideas moving to the forefront: paying per word and/or paying on a royalty basis. Angela James wrote a very good article about editor pay. As with author advances, this is not going to be comfortable for everyone, but it’s worked out quite nicely for more than a few editors. Bonus: fewer meetings, more editing. Minus: unless your book hits big, your hourly rate is, at the end of the day, rather low. Granted, if you’re working in-house at a traditional publisher and already squeezing your actual editing job into your personal time, this might even out in the end. I am, sadly, not kidding

  On Twitter and over time, there have been discussions about the disconnect between editorial and sales and marketing and readers. The people who know the book the best, have championed it, worked with it, invested in it, are very often removed from the process of seeing it succeed. To me, that is unaccountably strange. Of course, as noted above, I’m not sure how the modern editor could add one more task to the schedule. Imagine the culture shift involved in holding fewer meetings…imagine the the number of meetings required to implement such a policy!

  Over our brief lifetime, I was also contacted by cover artists who were also willing to work on a royalty basis. This was not the approach we chose, but, yeah, getting your foot in the door as an artist is all about taking risks. Again, something to think about, especially when you’re starting up.

• Quality Control — Issues of quality have long been a concern of mine, and I’ve been dumbfounded by authors and publishers who refuse to acknowledge this as a legitimate issue. As you can imagine from the above, there are quality risks a publisher takes in this business model. Poor quality in books turns off customers. The first wave of ebook adopters, readers willing to take a chance because they craved something different, were largely repelled due to poor quality control, including production and editorial.

  There has been much progress in this area, but those early perceptions remain. Quality will be, I believe, a growing issue in this marketplace. Existing publishers, facing an influx of new-to-ebook readers will be going head-to-head with traditional publishers.

  It should make those traditional publishers cringe to know that they are not surefire winners in this battle. I’ve talked before about the appalling quality of ebooks from very big publishers, and I’ve talked about the sheer (only it was spelled shear) lack of editorial attention to some books. Factor in pricing, DRM, and the way online readers connect, and there are definite pain points for traditional publishers.

• Print Is Expensive — Building an infrastructure for print distribution, especially in this marketplace is insanely expensive, far more so than building a digital distribution infrastructure. While it leaves out many physical retail outlets, I remain convinced that a smart POD or PTO program is the most fiscally responsible choice a digital publisher can make, at least until there is a solid idea of sales and customer preferences. Doing print wrong is bad for everyone.

• Unit Sales Are Lower — This might be one of those “duh” points. Let’s be frank: the vast majority of readers have not yet adopted ebooks. Publishers who have succeeded have done so by leveraging a growing market while keeping costs low. Luckily, breakeven is a lower dollar value. I will note (though surely I don’t have to!) that low unit sales are not limited to digital publishing. As Daniel Menaker reiterates in the article linked at the end of this post, far too many traditionally published books fail to earn out their advances. One wonders how long this will be possible.

• Managing Prices — Success comes in many ways, and one is matching consumer pricing expectations. Looking back at my editorial pay thoughts, both payment approaches allow a publisher to better manage certain costs, allowing them more flexibility when it comes to setting prices. Hint: readers are price and word count conscious. As new readers move into the market, they’re going to seek out like-minded readers in their favorite niches. Information will be shared.

• Direct versus Third Party Sales — To date, this model has been successful for publishers because they have built a strong (and growing) readership via direct sales. This increases the amount of money flowing to the publisher and author. In order to maintain this advantage, publishers need to use marketing tactics to encourage readers to shop at their website and, above all, make sure formats are well-supported.

  However — and if I gave the impression otherwise in my previous post, that was not intended — any digital publisher entering today’s marketplace must factor the increase of third party sales into financial models. They are growing, and they’re going to continue to grow, though estimating the percentage of sales they comprise is a moving target. In a recent post, Mike Shatzkin considers making verticals even more more vertical by aggregating like content, regardless of publisher, aka the tor.com model. This is happening to a degree as eretailers emerge in marketplace and build a solid customer base, but nobody can ignore the hardware/software stranglehold being created by large retailers.

  You cannot expect the readers to discover your website. You cannot expect the readers to want to go through the hassle of figuring out files and formats and how to use them. And you cannot (this will sound familiar to all publishers great and small!) expect readers to know about or care about your business model. What you can do is make the idea of buying direct from your website as attractive and easy as possible. If there is a weakness in today’s digital publishing business, it is right there. Buying ebooks is far too hard, and that goes for all publishers great and small.

  (Interesting: after I’d written the above, word came via Jane at Dear Author that Ellora’s Cave, a noted hold-out in the Kindle store, may be reconsidering this position.)

The above is not a comprehensive look at the digital publishing business model, but I think I hit many key points. Astute readers will notice that there isn’t anything different in this model, unless you count the more careful aligning of costs to sales. As with new business in any industry, starting a new publishing business is filled with risk. I would posit that starting a small print publisher is far riskier than starting a digital publishing company — both from the perspective of infrastructure and ongoing costs.

I still believe this model is viable, and I’m pleased to see others entering the game despite Quartet Press’s lack of success.

Extra credit reading:

• On Hosting One’s Own Parties and Performing a Bookish Autoposy: Kat Meyer expands upon her thoughts (in the comments below) about digital distribution (warning: she sparked thoughts on my end — we may end up on fire!). Also she mentions the too-fab Peter Collingridge, someone I’ve admired for some time.
• Redactor Agonistes: Daniel Menaker writes about editorial job satisfaction and other issues. His observations support some of my points. Risk, she is everywhere.

As I write this, I am loading my Kindle in anticipation of a cross-country flight. American Airlines apparently wants to charge me for every bag I check (and, whoo hoo!, I got to use my own ink to print advertisements on my boarding pass), so, yeah, I’m doing everything I can to make sure I don’t exceed carry-on size. I don’t have the luxury of packing books for the flight there in my carry-on bag while books for the flight home are stuffed in my checked suitcase.

Three books I wanted to buy aren’t available in Kindle editions. Only one of those is a book I really feel I must have. The others are nice-to-haves. For the authors and publishers, those are lost sales. Robert Gottlieb, literary agent, says “he doesn’t allow any of his authors’ books to be published simultaneously as an e-book when he can prevent it.” (WSJ article, via Publisher’s Lunch due to WSJ paywall)

In the same article, agent Richard Curtis is just as blunt, saying, “We don’t want to undercut the sales and royalty potential of the printed hardcover.” This makes me wonder: does withholding product from the market actually help sales? Are Curtis and Gottlieb assuming the ebook customer will shrug and purchase the print book?

At least they’re being honest about it. They’re worried that ebook sales will negatively impact the potential for this title to hit a bestseller list. They’re worried that the difference between earned digital royalties and lost print royalties is too vast. Apparently, ’tis better to have no sale at all and all that.

Gottlieb compares the hardcover and ebook markets to theatrical and DVD releases. It’s a bad comparison. I’ve used vinyl albums versus cassettes. Others use CDs versus digital downloads. But theatrical versus DVD? The DVD package often contains more content, more entertainment than the theatrical film; the ebook, generally, has less. And the DVD purchase is generally cheaper than the price of seeing a movie in a theater, after you factor in ticket price, food, and beverage. And, of course, you can resell the DVD, loan it to a friend, and/or play it on multiple devices.

I wonder if publishers are paying attention to the rumbling from readers about crazy, unpredictable digital release patterns. Is the ebook release concurrent with print? A week after, two weeks, six months? Think about it: all your marketing efforts are getting customers to the point of sale…and then you lose them. These readers are not saying, “Well, that format isn’t available so I’ll just buy this one.”

Nope, they’re saying, “That format isn’t available so I won’t buy this book at all.”

What Curtis and Gottlieb are suggesting is that the current business model needs to be protected above all else. I would suggest that preparing for shifts in reader behavior now leads to less pain in the future. Is it better to scoop the mass market reader into the hardcover window via digital or is it better to maintain the status quo, relying on those sales to happen at the mass market/trade level?

If the reader is me, it’s definitely the former because other books will capture my attention in those intervening days, weeks months. The longer the gap between reader awareness and ability to purchase, the greater the chance that a book will be forgotten (or, ahem, sunk due to poor word-of-mouth).

I’m not sure what the answers are, and it will only be through experimentation and analysis that some of these answers emerge. I think there’s some danger in expecting consumers to play by the rules of last year’s business model, especially if readers are adopting this technology at an impressive rate (considering digital reader, phone-based, and the ever-popular browser based reading). In fact, I think it’s dangerous to expect readers to buy into your business model at all.

Over the past few years, we’ve had the special privilege of meeting some authors who not only exhibit incredible talent, but also the ability to connect with readers — in a huge way — through non-traditional means. One of those great people, author Seth Harwood, is now counting down the days to his major label debut for his first novel Jack Wakes Up (listen to our previous interview with Seth interview here).

Note the use of the phrase “major label debut”. Jack Wakes Up was picked up by a small press before attracting the notice of Three Rivers Press. Before that, Harwood podcast the novel. Oh yeah, he gave it away free. Or, he believed in his work enough to make sure it reached an audience. Harwood, who received his MFA from the Iowa Writers’ Workshop, knows one important thing: it’s the story…and a whole lot more.

In the video linked below, he talks about how he did his thing. Your results may vary, but the true lesson is that you make your own success.

There have been a few posts in the publishing blog world recently that seem to set certain groups against each other. There was #agentfail, Victoria Strauss’ response to self-publishing positivity and Indie Author’s defence of self-publishing, amongst many others.

But despite our differences, we are still a community of people who love books, love writing, and love creativity. We may sit in different parts of the Publishing Quadrant…but the differences are beginning to melt away.

• Traditional publishing has been steadily moving into the Digital Publishing quadrant with many top authors releasing ebook versions. As ebook sales have increased, so have print versions. Romance and erotica seem to be taking off especially well! Barnes & Noble bought Fictionwise and we can expect some more consolidation of the ebook retail market.
• Traditionally published authors are using free ebooks to sell more print books: Cory Doctorow and Paulo Coelho amongst others.
• Digitally published authors are also crossing into traditional publishing. J.C.Hutchins podcast success has got him a book deal with St Martin’s Press. Video blogger Gary Vaynerchuk got a 10 book deal with Harper Collins because of his online platform.
• Audiobook success in the UK is giving an extra income stream to traditional publishing.
• Traditional publishing may also consider POD as the economy stops large print runs.
• Self-published authors use POD to sell their books overseas on Amazon.com through Lulu, Booksurge, CreateSpace and others.
• Self-published authors are using ebooks to expand their market on sites like Smashwords which also allows the book to be sold on mobile devices like the iPhone
• Authors are using self-publishing to get attention for their books and move into the traditional publishing quadrant (Christopher Paolini “Eragon” is one example, as well as the recent Lisa Genova’s Still Alice).
• Traditional publishers are also encouraging the self-publishing authors to pitch in new digital ways, for example, Harper Collins Authonomy.

Of course, this diagram is simplistic and there is so much more to each quadrant, but we are all still part of the same brilliant industry. We all want more books, more readers, more creativity and innovation in publishing.

By working together across these quadrants, we can achieve that.

*********
Joanna Penn is a self-published author. Her blog, The Creative Penn, has information and inspiration for authors on writing, publishing options, internet sales and promotion. Twitter: @thecreativepenn

[Special thanks to Joanna for this! Understanding that the pieces flow together rather than operate independently is so important.]

Boycotters are buying books from your competitors while leaving yours in the virtual shopping cart.

Maybe Amazon is tired of subsidizing your business development?

Let’s lay out the basics again. First, a digital book is different than a print book. Fewer bells and whistles (nifty color cover? gone). Fewer associated rights (portablity, limited; sharing? ha!). Production problems (can you say double-spaced paragraphs?). I’ve noted previously that everyone who buys into the digital book market right now is essentially funding your research and development.

While we’re examining this issue, let us ponder the idea of tying the current digital price to the current print price, or, ahem, pricing the d-book higher than the print?. How can you, with a straight face, justify this approach? Do the people who purchase d-books at the $26.99 digital list price get more book than those who get the $7.99 list book? Truly, this practice defies logic, and makes it clear that someone in these meetings doesn’t get it.

Consumer dissatisfaction — your customers really get the differences between d-books and print books — is fomenting. While I’d like to say that we’ll rebel by going back to print books (take that!), the real destination is far scarier. I thought this comment from Electronic Cottage was telling, particularly because the dissatisfaction is spreading beyond the inside publishing beltway to “real” readers” (via the Tools of Change blog):

Boy, if I were a publisher or author, I sure wouldn’t want to see my books listed at the top of the tag’s “Popular Products” under the boycott tag.

(Amen! I’m not planning to join in the tagging. Just seeing it makes me hurt.)

This past weekend, Martyn Daniels, arguing that this boycott should be aimed at publishers rather than retailers (though, given how books are sold, the boycott must necessarily be at the retail level), noted that the current business practices as they relate to d-books do not “endear customer loyalty”.

I’d be more blunt: treating customers with blatant disrespect is a the path to rampant piracy.

In the past weeks, we’ve seen a rush of activity on the hardware front. If a company is capable of developing an e-reader, they’ve actively doing so. It’s a bit like books are the last frontier, a literary dot-com rush. You know it’s trendy when AT&T and Verizon start talking e-readers (this was not, apparently, an April Fool’s prank). We’re seeing a burst of innovation that can only be good for publishers/authors (not necessarily separate entities anymore), books, and readers.

We’re also seeing a slippery, rocky slope that can shatter the business at hand. While devices don’t necessarily engender proprietary DRM, entities who see protection schemes as a way to lock-in customers will certainly do so. Who wins? I’d say nobody. Who loses? Every customer who is seduced into purchasing (or acquiring) one of these devices.

Close your eyes and imagine a not-too-distant future: a future where you’re doing tech support for your mother because she can’t share a book with your father because one is a Kindle user and the other prefers the free Verizon reader that came with lots of incentives. Do you really want to have that conversation with your parents?

Here’s the funny thing: even though I won’t currently pay more than $9.99 for a d-book, I can see a future where going above that threshold makes perfect sense. Probably not for fiction, unless that fiction came with amazing bells and whistles, making it worth the price. Then, well, see above about tying price to print version. Smart publishers will rethink editions and versions. They won’t punish early purchasers with arbitrary price changes.

But I can see situations and reasons for paying high prices for digital books. But the technology simply isn’t there yet for this kind of consumer investment. Or maybe the technology is there, but publishers simply haven’t found a way to make their books worthy of the prices they want to charge.

Even as we see exponential growth of ebook sales, most publishers see this market as a 1% blip on the P&L. Nice-to-have money but not really impacting the bonus pool. What is missing from this equation is the competition: the digital publishers who are building brand and customer loyalty by offering readers what they want, by listening, by reacting quickly.

Customer voices are growing louder. Maybe once upon a time, you could pretend you knew best for us, but that time is long gone. Think about it: there’s a public tag Amazon telling uninitiated customers that your books are being boycotted. In the meantime, those who are engaged in the boycott are doing something equally evil: they’re buying books from your competitors while leaving yours in the virtual shopping cart.

As with DRM, right now is the time to get it right. A year from now will be too late.