The Wall Street Journal, June 3, 2010
Edited by Andy Ross
Digital self-publishing is creating a powerful new niche in books that's
threatening the traditional industry. Once derided as "vanity" titles by the
publishing establishment, self-published books can now thrive by
circumventing the establishment.
Fueling the shift is the growing
popularity of electronic books. Apple's iPad and Amazon's Kindle have made
buying and reading digital books easy. In 2009, U.S. book sales fell 1.8% to
$23.9 billion, but e-book sales tripled to $313 million, according to the
Association of American Publishers.
Many big publishers dismiss
self-published titles, noting that they may be poorly edited and are almost
never reviewed. But online self-publishing and newcomers such as Amazon
could mark a sea change in publishing.
Amazon provides service tools
for authors to self-publish and has created an imprint to publish promising
authors in print and online. Amazon is increasing the amount it pays authors
to 70% of revenue for e-books. A self-published author whose e-book lists
for $9.99 on Amazon's Kindle e-bookstore will receive about $6.99 for each
Traditional book-industry players and tech companies are
jumping on the digital self-publishing bandwagon. In May 2009, Apple
announced a digital self-publishing program for its iPad giving 70% of
revenue to authors, and Barnes & Noble announced a service called PubIt!,
allowing authors to post and sell e-books online.
In May 2009, Amazon
launched its own publishing imprint, Amazon Encore. From a sea of
self-published titles, Amazon plucks a few with promise, then edits and
distributes them online and through print retailers.
More than 90% of
sales still come from physical books. In addition to the editing and
marketing support for their manuscripts, many writers depend on the advances
they get from their print publishers. Self-published authors only generate
revenue when their books are sold to consumers.
As more authors
self-publish their work, publishers' control weakens over how titles are
distributed and which books are offered for sale. Some publishers fear that
one of the big technology companies now distributing e-books will compete
for the best-known authors by offering advances.
publishing houses have long depended for much of their profit on selling
backlist titles, books in print for more than a year. In coming years, there
will be adequate substitutes for many of those works at a quarter of the
The proliferation of cheap digital books concerns even
publishers who don't think readers will defect to self-published titles.
Amazon had been retailing most top e-books for $9.99. Publishers worried
that such prices could devalue the industry's cash cow, hardcover books.
Amazon has now adopted an agency model, in which publishers set prices for
books and Amazon takes a cut of the proceeds.
Amazon uses its
technology to merchandise the "long tail" of niche books. While traditional
publishers rely on name-brand reviews, Amazon has millions of customers
posting reviews. Amazon offers free, instant, sample chapters to hook
readers. And it makes computer-generated recommendations based on other
readers' purchases. For new writers, Amazon levels the playing field.
AR I'm riding on this
revolution. May the smug and snobbish old-boys-club world of traditional
publishers go down the tubes with the flush of pee and poo that it deserves!
Random House CEO on E-Books
Der Spiegel, August 4, 2010
Edited by Andy Ross
SPIEGEL interview with Random House CEO Markus Dohle
SPIEGEL: Your rise to the top at Random House was met with disdain in New
York. You were seen as an outsider from Bertelsmann in Germany. Did you get
an icy reception?
Dohle: The book industry is about making money with
SPIEGEL: How much of your turnover comes from e-books?
Dohle: Around 8 percent in the US right now.
estimate that in 10 years' time only a quarter of all books will go to
readers in printed form. Do you think that's realistic?
don't agree. The market share for electronic books, even in the United
States, will more likely be between 25 and 50 percent by 2015.
SPIEGEL: When Apple introduced its iPad in January, five of the six biggest
U.S. publishers were partners in Apple's online iBookstore. But Random House
is still not part of the effort in the United States. Do you really believe
you can do without Apple?
Dohle: We believe that we have to proceed
in a very thought-out way, in order to find a sensible business model that
will hold up in the coming years.
SPIEGEL: Amazon is the dominant
vendor in the e-book business. Is the book turning into a bargain-basement
Dohle: Pricing pressure is just as prevalent in the print
stopped being just an online bookseller a long time ago, and now it acts as
a publisher itself. Who even needs publishing companies anymore?
Dohle: There is a risk that publishers will go under, but we are very
self-confident in that regard.
SPIEGEL: It's also a question of how
you can ensure that authors remain loyal to your company.
Trust plays a very important role. And being patient is also part of it.
SPIEGEL: Amazon sometimes pays authors a 70 percent share of sales,
while classic publishing houses often pay only 10 percent. Do you have to up
the ante to keep your authors from leaving?
Dohle: That's an issue we
address in talks with authors and agents.
AR I narrowly escaped
becoming an employee of Bertelsmann in 1998-99 by moving on to SAP.
Dohle's complacency — "we are very self-confident" — seems about right
for a tube flush.