Yankee ss Derek Jeter cleanly fielding Mike Shatzkin's grounder. He was out by a mile.

Mike Shatzkin is a future Prognostication Hall of Famer but by his own admission he tapped a weak grounder to shortstop when he predicted that the iPad wouldn’t not have an “immediate significant impact on ebook sales.” In fact, the impact was nothing short of explosive.  For a couple of publishers, e-book sales tripled or even quadrupled after the Apple introduced its device.

Shatzkin’s prediction had by no means been crackpot. Though he knew the iPad would sell big time (it ended up selling 1 million units in a few weeks after launch), like so many of us he figured its biggest use would be videos and games, not reading. He was also skeptical that a lot of people would want to read on a pinkie-busting 1.5 pound iPad (Kindle weights 10 ounces).

How wrong can a prophet be? “I was proved wrong in less than a month,” confesses Shatzkin in a recent posting.  “Apparently if we get slightly larger and portable screens into people’s hands, they want to read books on them.” And consumers obviously were willing to sacrifice their pinkies to be early adopters of the iPad.

It’s okay, Mike. Your .299 batting average still puts you in MVP contention.

Richard Curtis

If you’ve been reading our monthly postings of e-book retail sales bulletins provided by the International Digital Publishing Forum, you are aware that as the numbers doubled, then tripled, and most recently quadrupled those of the prior year, the stridency of our prose has progressed deeper and deeper into the purple spectrum.  Right  now we’re tapping into our reserves of hysteria and if the curve gets much steeper we will have to be forcibly restrained. By the opposite token, if the curve flattens even a little we may climb out on a ledge – we’re that spoiled by unmitigated good news.

Will the joyride ever end?  Digital pundit Mike Shatzkin has dared to ask the question.

Though he says “Your guess is as good as mine,” in fact Mike Shatzkin’s guesses are far better than ours.  But he reminds us of the fundamental truth that nothing lasts forever.  There has to be a saturation point.  But what is it, when will it come, and what factors will make it happen?

The prospect for the near future looks rosy, in good measure because there are so many new platforms and devices coming on stream such as Copia, Blio, Apple’s iPad, Google Editions and a clutch of e-book readers with new features including color, larger screens, and touchscreen capability.  And we know that Amazon will counter competition with a host of Kindle upgrades and improvements.  So, says Shatzkin, the next year will see a continuation of robust retail growth which he puts “conservatively” at 3.5%. That means that “the e-book minimum expectation by next Christmas would be between 15 and 20 percent of the sales of a new title.” Then what?

“And then,” says Shatzkin, “it can’t really continue the same growth rate the following year because that would take us to a great majority of books read being e-books. And I don’t think you’ll find anybody expecting 60% or more e-book penetration in two years.” The saturation point? “It won’t start slowing down until e-book sales are 20-25% of what a publisher expects on a new title.”

He expects that topping-out moment at the end of 2012.

Read Ebook growth continues to accelerate; how long can this go on? and decide if your own guess is as good as Mike Shatzkin’s.

Richard Curtis

Ladies and gentlemen, start your crystal balls.

Digital Book World, a conference devoted to exploring the future of publishing both digital and conventional (if there is any such thing anymore) begins today with guru Mike Shatzkin as its driving organizer and master of ceremonies. It will take place at the Sheraton New York Hotel & Towers in New York City, January 26th and 27th.

The schedule is studded with publishing notables who have led the industry’s charge into cyberspace, but it will be attended by professionals who have to apply the thrilling advances in technology to a business still mired in another century, arguably the 18th.

But “Digital Book World isn’t just about strategies, it’s also about the network,” says the event’s website. “Because of our focus on consumer publishing, our speakers and attendees represent publishers of all sizes and niches – from HarperCollins, Penguin and Random House to Tor, Chelsea Green, National Geographic and Ellora’s Cave – as well as literary agents and other allied professionals, and vendors with an interest in the future of consumer publishing.”

Among the highlights are:

• An overview of Google Editions
• “Back-Loaded Book Deals” with Roger Cooper, Bob Miller and several agents
• “The Next Generation of eBooks”
• “Tomorrow’s Book Contract: New Language and Provisions to Reflect New Conditions” hosted by yours truly

A big draw on Wednesday will be “The Changing Agent-Author Relationship: How it Will Affect the Business Model” moderated by Sara Nelson of Oprah’s Book Club. Her panelists will be agents Gail Hochman, Scott Waxman, Brian DeFiore, and Wendy Keller of Keller Media.

A spectral but influential presence will be Apple, which will be announcing details of its tablet on the afternoon of the conference’s second day, and not a few attendees will be glancing at their blackberries to learn details of the breaking news. Ironically, that will happen around the time of a concluding statement by Guy LeCharles Gonzales of Digital Book World entitled “The Future of Publishing is Bright”.

You can click here to visit the conference website and here to view the schedule.

Richard Curtis

Don’t start the e-book revolution without us. That seems to be the message coming out of the literary agent community as reflected in their response to invitations to a major conference taking place in New York City’s Sheraton Hotel and Towers at the end of January and presented by F+W Media (publisher of Writer’s Digest and Writer’s Market)

The revolution has overcome countless obstacles on the road to the tipping point, but one stubborn source of resistance has been the agents. Their intransigence has not been so much a matter of hostility as uncertainty. Caught flat-footed by developments that went from zero to warp-drive speed in the blink of an eye, agents have struggled to get a handle on their role in the new e-world order. Though they take pride in being ahead of their clients, in the case of e-books many of their authors are way ahead of them, doing things or at least thinking thoughts that do not involve services commissionable by their agents such as self-publication of unsold books. Other agents simply want to be able to answer author questions or help their clients find a place in a universe that seems to be hurtling out of control. One wag described it as “Agents on the verge of a nervous breakdown.” (See Why Don’t Agents Want to Play?)

Mike Shatzkin, chairing Digital Book World on January 26th-27th, is determined to draw agents into the e-book process by designing a number of programs specifically to interest them. “The Changing Agent-Author Relationship: How It Will Affect the Business Model,” chaired by Oprah’s Book Club’s Sara Nelson, is one such. Another, “Tomorrow’s Book Contract,” chaired by yours truly, features several agents, a lawyer and a publishing company rights manager presenting wish lists of contract language and provisions reflecting changes in the publishing landscape.

Other panels and speeches will address non-e-book topics of concern to agents such as “Back-Loaded Book Deals: No (and Low) Advance Contracts, Profit-Sharing and Other Innovative Business Models”.

With its glittering roster of publishing industry star speakers and panelists, we’re told that the conference is almost sold out, but if you’re a literary agent you can be sure Mike Shatzkin will do his best to squeeze you in.

For complete information, visit Digital Book World.

Richard Curtis

We scoff at prophecies of Mayans
And offer toasts to healthy buy-ins.
So what if 2012 draws nigh?
Prognostications? Mike’s our guy.
Seers of yore are mere ersatz kin
Compared to clairvoyant Mike Shatzkin.
We hope his crystal ball discloses
A featherbed of ruby roses.
Richard Curtis

Mike Shatzkin’s name was a challenge to find a rhyme for, but challenging imagination is what Shatzkin, the publishing industry’s oracle in residence, is all about. He’s done it again in a year-end blog posted on his Shatzkin Files website.

“It is customary,” he writes, “for those of us who do crystal-ball gazing to make some calls about the year ahead at around the time the celebrants head for Times Square. I am not a man to flout custom.” Shatzkin then offers us a baker’s dozen of predictions for the coming year. Here’s an abstract. For the fully fleshed out version click here. You might want to take a tranquilizer first. The unprepared or unaware tend to manifest symptoms of airsickness.

• At least one major book will have several different enhanced ebook editions.
• The growing incidence of bookstore-less cities will provoke the mass merchants to explore a greatly increased title selection inside their stores as a magnet to attract disenfranchised bookstore customers.
• Ebooks that are too short to be print books will become a real factor in ebook sales, opening up new opportunities for publishers but even more for authors.
• Driven by new entrants in the field, self-publishing, and unbundled aggregations of print books, the gap between the items listed in “Books in Print” and the items that should be listed in a directory of “Ebooks Available” will continue to grow.
• The rearrangement of the big publishers’ IP portfolios will begin in 2010 as they emphasize what they do best: deliver narrative-writing and children’s books to multiple outlets in large quantities.
• By the end of 2010, ebook sales will routinely constitute at least 20% of the units moved for midlist and the lower tier of bestsellers and at least 10% of the units for really big bestsellers.
• By the end of 2010, the experiment with “windowing” ebooks — withholding them from release when the hardcover comes out — will end as increasing evidence persuades publishers and agents that ebook sales (at any price) spur print book sales (at any price), not cannibalize or discourage them and, furthermore, that this withholding effort does nothing to restrain Amazon’s proclivity for discounting.
• Managing territorial rights for ebooks will be a growing problem the industry will have to deal with.
• Some authors who have developed huge followings on Facebook and Twitter and their own blogs start to demonstrate that they can have a serious positive impact on the books of other authors they favor.
• With the arrival of Google Editions in the first or second quarter of 2010, there will be multiple channels to the ebook market through a variety of players: Google, Amazon, Apple, Baker & Taylor’s Blio, Kobo (formerly Indigo), and Sony will not be alone!
• Because there are so many players fighting for a foothold in ebooks, discounting them deeply will be the “new normal.”
• The merchandising challenge for ebooks will ultimately be met web page by web page over the entire Internet. This future paradigm will be tipped in 2010 when we start to see ebook stores on more and more non-book web sites, each trying to deliver some sort of value-add with curation or follow-on products.
• The big meme coming out of 2010 will be “what is a book?”) Publishers will increasingly be releasing productions that contain video, audio, animation, slide shows, and interactive game elements. Movie, TV, and game producers will see an alternate marketing and revenue channel available through “ebookifying” content they have and moving it through book channels like a “tie-in.” Where one stops and the other begins will become increasingly difficult to see (and increasingly irrelevant).

Richard Curtis
Poem excerpt from “The Year of the Tweet” by Richard Curtis,(c) Richard Curtis reprinted from Publishers Weekly, December 21 2009 Reed Elsevier Magazines.

Ruminating about the current controversy about whether publishers should delay e-book reprints of hardcover books, Mike Shatzkin had an epiphany. And when Mike Shatzkin has an epiphany it usually ends up kicking the paradigm shift a hundred yards up the road.

“This is really about the agents and publishers trying to take control of ebook pricing, and value perception, back from Amazon,” says Shatzkin. One proof of his contention is that Barnes & Noble, a retailer that few consider to be a friend of publishers, actually agrees with the publishers’ position. B&N Chairman Len Riggio says holding off e-book reprints is “in keeping with the long-held practice of issuing paperback editions after the initial hardcover.”

“If the other biggest bookseller, which also has a dedicated e-reader and an aggressive attitude toward consumer pricing, seems okay with this idea, it strengthens my belief that it is about controlling Amazon, not about controlling ebook pricing,” says Shatzkin. “The desirability of restraining Amazon is certainly something the big publishers and Barnes & Noble can agree on.”

Shatzkin then touches on the essence of the power struggle: “If the big houses can do this, they can do much more than this. They can sell ebooks direct off their own web sites.”

Direct Sales of Books and E-Books by Publishers

Almost two years ago, in an article entitled Direct Sales: Publishing’s Last Stand, we surmised that a war between publishers and booksellers was inevitable, and the only effective weapon publishers have in their arsenal is direct sale of their books to consumers. “Publishers have awoken to the horrible realization that by allowing themselves to ” we said. “As their profit margins wear down to transparent thinness, they understand they must recapture the advantage or risk being marginalized even more than they are now.

“There is only one way for publishers to recover the initiative,” we concluded, “and that is to sell books directly to the consumer.”

War to the death? “It is hard to imagine this battle ending peacefully anytime soon,” asserts Shatzkin. Read about his epiphany at length on his blog: The ebook windowing controversy has subtext.

Richard Curtis

Michael Hyatt, CEO of Thomas Nelson (right), brought to my attention that he actually did (and promptly) respond to questions raised by Mike Shatzkin about Nelson’s self-publishing venture, WestBow Press. His response was in the form of a comment on Shatzkin’s blog, and we’re very happy to reproduce it here.

Richard Curtis
***************************************
Mike,

Thanks for asking these questions and giving me a chance to respond. I do, by the way, enjoy your blog and your perspective on publishing.

“1. How many such titles will they do per season or per year?”

This question doesn’t apply to the WestBow Press situation in quite the same way it applies to a traditional publisher. The WestBow model is the exact opposite of traditional publishing. In the traditional model, the publisher is the customer because the publisher buys manuscripts from authors. In the WestBow model, the author is the customer because the author buys services from the publisher.

The traditional model is resource-driven. The publisher is constrained by its access to capital and its appetite for risk. At Thomas Nelson, for example, we only do about 500 new titles per year, because we have a finite amount of capital that we can invest in royalty advances, inventory, and accounts receivable.

The WestBow model is demand-driven. The author is putting up the capital and taking the risk, so the publisher—or service provider, if you prefer—is only constrained by its ability to scale its operation up quickly enough to meet the demand.

All that to say, I have no idea how many titles we will do per season or per year. This is completely a function of demand.

“2. How will access to Nelson’s (always limited, as is any publisher’s) sales and marketing bandwidth be allocated to this imprint?”

Other than macro-level advice from time to time, none of Thomas Nelson’s resources will be allocated to sales and marketing. This is entirely ASI’s responsibility in the partnership. This kind of sales and marketing bandwidth is available to WestBow authors as a service from ASI, just like other services. Thomas Nelson’s bandwidth will be 100% focused on Thomas Nelson authors—just like now.

By the way, some of the questions we have received like this imply that traditional booksellers are the primary or only legitimate outlet for distribution. Many authors have their own platforms (e.g., speaking, blog, radio show, etc.) which more than justifies their investment in the WestBow model. They don’t need anyone else’s bandwidth to be successful.

“3. Will the books be vetted as suitable for Nelson’s Christian mission? And, if so, how and by whom?”

Yes, all WestBow Press titles must be congruent with the Thomas Nelson Content Standards. Every manuscript will be reviewed by either a WestBow editor who has been trained by us or a qualified freelancer who has been trained by us. This is precisely how we do it now at Thomas Nelson. In fact, I joked the other day that I think we have given the WestBow editors more training than our own people.

“4. Will the books be vetted at all for quality? Or will an author just choose the WestBow option and, if that’s the case, how much extra will be they paying and what will they be told they’re getting for their money?”

No, they will not be vetted for quality. They will be given a candid assessment of the quality and offered various editorial services that will make the manuscript better. But in the end, we are providing a service to the customer. He or she will be the final judge of quality.

These services are priced differently, depending on how involved they are. For example, substantive editing is more expensive than copy editing. Copy editing is more expensive than proof-reading. This is how it works in the world of traditional publishing, too, when we hire outside editors or proofreaders.

“5. The story says that Nelson editors won’t touch the books but will ‘monitor sales to identify potential big sellers.’ What’s the pre-monitoring launch plan? What’s the plan if Nelson editors actually identify a ‘potential big’ book?”

I’d like to tell you that we have all this figured out. We don’t. Here’s what I can tell you: we will be getting weekly sales reports from ASI. It will show all WestBow Press titles and how they are selling. We currently do this internally for our own titles at Thomas Nelson. We call it our “Movement Report.”

We will obviously pay attention to those WestBow titles that are selling the most or at the highest velocity. At some point, I envision one our editors reviewing the WestBow edition of the book and then calling the author to discuss the possibility of entering into a traditional publishing relationship with Thomas Nelson.

From that point, it will be handled as a typical author-publisher negotiation. We do not require them to publish with us or “lock them in” in via the WestBow contract in any way. They are free to publish with anyone they wish. However, we will have the early visibility and, hopefully, the first-mover advantage.

Someone asked on another forum, why would a WestBow author want to sign with Thomas Nelson if they already had proven they can be successful without us. Good question. The short answer is that they may not want to sign with us. No problem. Every situation is different.

But if they do sign with us, they will then go into our catalog, be represented by our sales team, and have the potential to get their books into other channels and accounts not available to them through WestBow.

I hope this answers some of your questions, Mike. I’m sure that I have created others! Please know that it is my desire to be as transparent and open about this as I can be, subject only to the availability of my time and attention.

Thanks again.

We conclude Vanity Week with a blog that futurist Mike Shatzkin recently posted, publicly asking Thomas Nelson, the Christian book publishing giant, to explain its new self-publishing program, WestBow Press. WestBow is partnering with Author Solutions, the biggest player in author-subsidized publishing and a partner with Harlequin in its controversial self-publishing venture.

Here are the questions posed by Shatzkin. We are not aware that they have been answered:

1. How many such titles will they do per season or per year?

2. How will access to Nelson’s (always limited, as is any publisher’s) sales and marketing bandwidth be allocated to this imprint?

3. Will the books be vetted as suitable for Nelson’s Christian mission? And, if so, how and by whom?

4. Will the books be vetted at all for quality? Or will an author just choose the WestBow option and, if that’s the case, how much extra will be they paying and what will they be told they’re getting for their money?

5. The story says that Nelson editors won’t touch the books but will “monitor sales to identify potential big sellers.” What’s the pre-monitoring launch plan? What’s the plan if Nelson editors actually identify a “potential big” book?

Hyatt discusses the initiative on his blog and says he sees real revenue in it. But he doesn’t answer any of the questions above.

I am not alone in anticipating that publishers may change things around in the future with big authors, sharing more risk (less or no advance in this case, not cash for services) for more reward. But it is a more radical step than I would have imagined for a publisher with an industry brand for quality to allow authors to buy their way onto the list. Their must be some controls here, one would think. But we certainly don’t know what they are yet.

Read The new Thomas Nelson self-publishing initiative; more questions than answers.

RC

When you admire a guru, you have to take the bad prophecies with the good. Mike Shatzkin, who is giving a significant presentation at the commencement of Book Expo America, is certainly our favorite guru. But damn!, his gloomy prognostication about the future of the convention is hard to live with, even though deep down we suspect it’s true.

There are two classes of people in publishing: those who remember the American Booksellers Association (ABA) convention – BEA’s predecessor – and those who don’t. The latter roughly parallel those who don’t remember typewriters, black and white televisions, or automobiles with clutches. If these artifacts of 20th century civilization draw a blank stare, it will be equally hard to imagine what publishing must have been like when booksellers were important.

Before getting to his doomsday prognostication, Shatzkin takes us down memory lane to recall what BEA used to be. This is not merely idle reminiscence but, rather, Shatzkin setting us up to understand what the the convention has become and why it may no longer be a viable destination for a publishing industry that is exploding like a fragmentation grenade.

When I was a pup, the ABA was definitely an order-writing show. The number of independent bookstores who bought a big chunk of any trade list properly presented to them was in the thousands. (Now: what would you say? the dozens? wouldn’t hundreds be an exaggeration?) Only a few of the biggest publishers had sales forces large enough and disciplined enough to really cover them all, so most exhibitors encountered retailers who would do immediate business. Everybody had some sort of show “special” to encourage ordering. I think for many years it was “blue badges” that signified booksellers: you kept an eagle-eye out for them as the traffic streamed by and you knew exactly what and how you were going to pitch them.

Each night at the main convention hotels, several publishers — and all the mass-market publishers — ran “hospitality suites” offering liquid refreshment and munchies very deep into the evening. You’d make the rounds of those after you had gone to whatever events, dinners, and parties had taken place in other locations. I always found the time in the hospitality suites to be a highlight of the convention.

The halcyon days of the 1970s and 80s gave way to a more corporate environment when Reed Exhibitions, which bills itself as the world’s leading organizer of trade and consumer events, acquired a controlling share of the show, changing its name to Book Expo America. “Reed Exhibitions excels in creating high profile, highly targeted business and consumer exhibitions and events to establish and maintain business relations, and generate new business,” says the organization’s website.

Interestingly, Reed’s takeover paralleled the rash of trade book publisher mergers and acquisitions that, like a collapsing star, imploded the industry from hundreds of vibrant companies to fewer than a dozen behemoths in the space of a decade. 1996, the very year Reed acquired controlling interest in ABA, was the same one in which the mass market paperback business underwent a convulsive contraction that transformed the format into the Fifteen Top Blockbuster airport model that characterizes mass paper today. (I’ve written about this at length in a two part article, “The Rise and Fall of the Mass Market Paperback”: Part 1, Part 2.)

Thus, while Big Publishing seemed to be soaring in the late 90s it was actually peaking, and the shift made itself manifest in the book fair. “The long expansion of the US book trade, which had continued pretty much unabated from World War II until the mid-1990s, stopped and started to reverse in the Internet age,” writes Shatzkin. “Even worse for the industry trade show, consolidation of both big publishers and retailers accelerated. That meant fewer publisher customers to buy the booth space, and fewer retailers walking the aisles to make the booth space valuable.”

And now, a little over a decade later, the collapsing star of Big Publishing generates more heat ($24 billion annually) than light, and that’s reflected in the dimming of the celebration called Book Expo America. “The BEA of today isn’t the ABA of old,” laments Shatzkin. “The booksellers are just about gone. The late-night hospitality suites don’t exist anymore. And hardly any publisher goes to the show expecting to write orders. It is time to organize a betting pool where the question is: how many more BEAs before, like its Canadian counterpart [Book Expo Canada shuttered permanently early this year] it simply ceases? Three? Four? Hard to see more than that.”

Also shpracht Shatzkin. You can read it all in his blog, How many more times for BEA?

But wait – there’s a PS. BEA’s show director Lance Fensterman reports that the convention’s attendance is down 14% over the last one held in New York City, 2007, and exhibitor personnel registrations are down 10% to 15%. Overall exhibition square footage is down 21%. It looks like the Guru of Gloom is right again, dammit.

Richard Curtis

Evan Schnittman observed it as a smear of light on the fringe of our galaxy, but it took media guru Mike Shatzkin to fully articulate its significance. And significant it is, a possible game-changer in the internecine struggle among authors, publishers, and Google. It has to do with a little-known provision of the US Copyright Act of 1978.

Schnittman, a Vice President of Business Development and Rights for Oxford University Press, mentioned it almost as an afterthought at the end of “There Will Be Disintermediation”, the final installment of a brilliant three part analysis in his Black Plastic Glasses website. “Mark your calendars, folks,” he declares, “the disintermediation begins on January 1, 2013. What happens on January 1, 2013? See for yourself in the US Copyright Act of 1978, section 203. {…Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant…}” [bold print is Schnittman's.]

“What if this change,” asks Schnittman, “was so significant that it could possibly even spawn an industry wide reset of the way we do things?” He leaves us panting for an answer, and Shatzkin provides it:

“It turns out there is a clause in the 1978 copyright law that allows any author to reclaim any copyright despite any contract with a publisher, simply by serving notice. The copyright can be reclaimed no less than 35 years and no more than 40 years from the book’s original publication. So books published in 1978 can be reclaimed by their authors from 2013-2018.”.

“One wonders” Shatzkin ruminates, “how many agents are aware of this law and are preparing for it.”

Actually many agents have been aware of it for years, and a number have invoked it. It’s commonly referred to as the “Widows and Orphans Provision,” because it entitles immediate family members to recover from publishers or certain derivative licensees (like movie companies) the copyrights to works published by a deceased author. (Don’t worry, men, widowers are included!) What some agents may not be aware of is that an author doesn’t have to be dead for the reclamation to take place; he or she simply has to live long enough to take advantage of the provision. For books licensed to publishers after January 1, 1978, the law is effective “thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.”

What surprises Shatzkin is that Article 203 has not come up in discussions about the Google Settlement, and we owe him and Schnittman a debt of gratitude for placing it on the table.

Until recently we’d have said that (except for a small number of evergreen backlist books) most titles coming up for reclamation under the Act are worth little or nothing. But with Google’s push to monetize old books, even moribund ones may have value either to their authors, their publishers, or Google. As Shatzkin puts it, for some old books “it looks like a new payday has been set up.”

For the full text of Article 203 of the 1978 Copyright Act, click here.

Richard Curtis