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Week of 31 January 2011


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Monday, 31 January 2011
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09:08 - Barbara's dad seems to be recovering well. She didn't go over to visit this weekend, but her sister took their dad out for shopping and other errands and said he held up well. He's 88 years old, but he's tough.

I see that Michigan police have arrested a California man on suspicion of intent to blow up a Detroit-area mosque. The article says the man possessed explosives, but on further reading it turns out that the "explosives" he had in his vehicle were Class C fireworks, an obsolete term for Consumer Fireworks, which is to say firecrackers. Rumor has it that he was also found to be in possession of a squirt pistol. Well, okay. I started that rumor. And, although I can't endorse blowing up mosques--think of the innocent bystanders--I certainly have some sympathy for the guy if that was in fact his intention. Islam is the enemy of humanity in general and civilization in particular. No rational person wants nests of them here in the US, or anywhere else, come to that.

Amazon says the Kindle is good for 30 days of reading between charges. I read several times faster than average--call it 800 to 1,000 words/min for recreational reading--so I knew it wouldn't last that long, but I was curious as to just how long the charge really would last. It turns out the answer is six days. Well, maybe seven. When I turned on the Kindle yesterday, the battery indicator was down near empty, so I put it on the charger. During the six days since the Kindle arrived and I charged it completely, I'd read six full-length novels (Lois McMaster Bujold Vor Saga series) and several shorter pieces, totaling maybe seven novels' worth of text. That's with Wi-Fi turned off the whole time, so it appears I'll get the equivalent of maybe seven or eight full-length novels per charge. That's not bad, and I suspect Amazon's estimate is probably pretty close for their average customer, who probably doesn't average more than a book or two per week. (It's apparently not how long you have the Kindle turned on that matters; it's how many pages you turn.)


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Tuesday, 1 February 2011
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10:11 - Well, the bookstore chain Borders is basically toast. It's been circling the drain for the last couple of months, but their press release Sunday was probably the final straw. They'd previously admitted that they didn't pay publishers in December, but Sunday they announced they weren't paying for January, either. Worse still, they've stopped paying rent. The $500 million bailout loan announced a couple weeks ago almost certainly isn't going to happen. It was contingent on Borders getting $100 million plus in junior financing, which is extremely unlikely at this point. Lending money to Borders would be throwing money down the proverbial rathole. There's not even any point to Chapter 11 reorganization. I suspect we'll see Borders going into Chapter 7 liquidation soon.

That leaves only Barnes & Noble, which isn't in much better shape than Borders. Ironically, Borders and Barnes & Noble drove most independent bookstores into bankruptcy and are now themselves being driven into bankruptcy by Amazon and other on-line booksellers. That, and of course the e-book tsunami, which is already huge and is growing exponentially.

I saw a credible estimate yesterday that there are now about 10 million e-book readers in use, most of them Kindles. As impressive as that number is, it's just the beginning. I expect we'll see a $99 Kindle this year, and probably a $69 model in 2012. At that price point, buying an e-book reader becomes an impulse purchase. We'll see e-book readers reach the kind of numbers that MP3 players reached several years ago, crossing 100 million units before long and eventually passing a billion. Before too much longer, anyone who wants an e-book reader will have one. And that signals the death of printed books, or at least novels.

Most of my friends disagree with me about the death of printed books. They think printed fiction will remain common for the next 10 or 20 years or more, with print sales gradually dropping and e-books eventually becoming dominant. I think they're wrong, because print publishing depends on high volume sales, and sales volumes for printed books have already dropped into a critically low range both for hardbacks and paperbacks.

The problem is the mix of fixed and variable costs. Print publishers have very high fixed (overhead) costs, and there's not much they can do that they haven't already done to reduce those. Every book sold has to contribute to paying for rent and lights and staff salaries and insurance, which for the Big Six fiction publishers amounts to tens of millions of dollars per month, each. Furthermore, there are high fixed costs associated with publishing each individual title, whether you print (and sell) 100 copies or 10,000 or 1,000,000. Distributing those fixed per-title costs over a few thousand copies is very different from distributing the same fixed costs over tens of thousands of copies. That's why mid-list authors have been suffering badly for years, and why the publishers keep increasing the emphasis on best-selling authors and titles. If they're going to publish a book, it needs to sell a whole lot of copies to make the investment worthwhile.

But the real killer for print publishers is that, for historical reasons dating back to the Great Depression, bookstores don't actually buy books from publishers. The publishers put those books in bookstores on consignment. In other words, the publishers don't get paid for the books until they are actually sold. (And sometimes, as with Borders currently, they don't get paid at all.) When you walk into a Barnes & Noble and see row on row of new books waiting to be sold, those books don't actually belong to Barnes & Noble. They belong to their respective publishers. And, if they don't sell-which the vast majority don't--they go right back to the publisher, who gets to shred boatloads of books that it paid dearly to produce and ship. And those return rates are very high now and increasing. Some paperback imprints have 80% return rates. For every five books they print, only one sells and four end up being shredded. One copy has to cover the costs of five copies.

In other words, print publishing doesn't scale down. It's predicated on producing and selling X number of books. If publishers find themselves selling only 0.5 X, it's not a simple matter of laying off some staff and printing fewer books and fewer copies of each. As volume drops, the business model itself quickly becomes unsustainable. When it collapses, which it inevitably must, it's not a question of the number of different titles and copies of each title falling to some fraction of the former numbers. It's a matter of the publishers themselves collapsing because they can't sustain the costs required to produce any books at all.

All of this has huge implications for fiction authors. It used to be that traditional publishing was considered the safe choice. That's no longer true, if it ever was. Because publishers aren't the only ones that aren't getting paid. Increasingly, authors will find that publishers are unable to pay them the royalties they're due. They could sue the publishers, sure, but there's really no point to throwing money down that rathole. As they say, you can't get blood from a turnip.

So, increasingly, the safe choice for fiction authors will become self-publishing. Which also happens to pay better than traditional publishing. Much better. A few of the "big-name" authors are already starting to recognize the new reality and keep their new material for themselves, which is just another nail in the coffin of traditional publishers. As more and more bestselling authors begin to self-publish their new novels as e-books, the decline of traditional publishing will hit the cliff part of the curve.



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Wednesday, 2 February 2011
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13:02 - I'm getting a lot of email about Kindle, traditional publishing, the death of publishers and bookstores, and so on. This one's pretty representative.

From: Gary Mugford
  To: Robert Bruce Thompson
Date: Wed Feb  2 10:04:29 2011
  Re: The future of publishing

Robert,

I agree with you that traditional publishing houses do have a finite life span and that it's unlikely to be as much as ten years. The same goes for newspapers. And that hits home with me. I spent the first decade and a half of my professional life as a sports reporter for a local newspaper and two of the three major Toronto dailies. And I had a book in place at a big Canadian publishing house until a  split with my co-author and a downsizing at the publisher cost me my editor, and my champion.

So, this revolution does hit a little close to home. But I do see remnants of the old system surviving. Two aspects of publishing remain that any writer should be happy to avail themselves of. First, any writer needs an editor. We all read what we WANTED to appear on the screen, not what we actually wrote. And sometimes our voice is just a little off. Editors are worth their price, good ones at good prices, great ones being priceless. And most writers are clueless about PR. Admittedly, PR will be changing along with the revolution. Experts at getting book readings and signings at book stores will be less of a necessity. But PR experts who can get your book before opinion-makers on the web will be worth their cost too.

On the second level, you'll see book cover designers (Worth a thousand words ... etc.) and Print-On-Demand services. Authors will run a bunch of pre-sold limited edition autographed copies off for die-hard collectors.

The only one of the lot that can't work from home wearing their jammies is the POD service. And some of the newer book-creation machines I've seen could be run down in the basement. And wouldn't even need a sound-proofed room.

Barnes & Noble down your way and Chapters Indigo up here won't be around forever. They just don't know it yet. And when they're gone, you'll see a bunch of small independent book vendors spring up. They'll all be called So-And-So's Antique Books or somesuch name.

And the circle will be complete.

GM

Gary Mugford
Idea Mechanic
Bramalea ON Canada


Of course editors, layout people, cover designers, and other skilled people are still essential, at least for any author who has any sense. Those people will survive the coming crash in publishing and will prosper. Some of my readers have commented that publishers may morph into companies that provide these services, but I don't think so. Publishers have historically provided all of these services, but that wasn't the reason they survived. The ace of trumps in publishing was always their control of distribution channels, which is rapidly disappearing. Once publishers are no longer needed for distribution, they have no reason to continue to exist.

Speaking as an author, I have no wish to hire a redefined publisher to provide these services. I'd prefer to order a la carte, choosing a good editor, a good layout person, and so on. The best of these will be working for themselves, or perhaps in very small companies made up of individuals with different skill sets. Well, O'Reilly may survive and prosper, because it's already essentially doing that. In the 15 years or so I've been working with O'Reilly, I have never encounted even one O'Reilly staffer who wasn't superb at his or her job. It may be that over the next ten years or so O'Reilly will morph into a top-notch author services company. If that happens, I'll definitely contract out work to them.

I think a lot of the self-pubbed authors who are selling big numbers right now are making a huge mistake. Reading reader comments on Amazon frequently turns up remarks about poor or non-existent editing, covers that are just a stock photo with some text slapped on in Photoshop, and so on. Amanda Hocking, for example, has now sold half a million e-books on Amazon, and is probably earning $1,000,000+ per year. But her covers are amateurish, and I think that'll come back to bite her. She should be spending some of that money to make her books and covers as slickly professional as possible. Otherwise, she's going to find herself eventually losing readers to other authors who take more care with their products. She's basically a sprinter, but I think she needs to be looking at this as a Marathon.

I'd be surprised if bookstores survive at all. They're going the way of the village blacksmith and livery stable. I'm sure major cities will have one or two bookstores that specialize in rare and collectible books, just as they do now. The custom bookbinders will also survive here and there. But for the rest of us, we'll be buying collectors editions, if we're so inclined, over the Internet.


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Thursday, 3 February 2011
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08:54 - When Barbara got home from work yesterday, she handed me a small, heavy bag. At first, I didn't realize what it was. Then I remembered that I'd asked her, the next time she stopped at the bank, to pick me up a bunch of rolls of pennies. The microchemistry kits don't assume the user has a balance, and for the session on specific heats of metals I needed known masses of metal of known composition. Pennies fit the bill. Those made from 1962 to 1981 (and some 1982's) are solid brass, 95% copper and 5% zinc. Some 1982's and everything since have been made of 97.5% zinc and 2.5% copper as plating. Interestingly, the specific heats of copper (0.385 Jg−1K−1 or 24.465 Jmol−1K−1) and zinc (0.387 Jg−1K−1 or 25.302 Jmol−1K−1) are very close on both a mass and molar basis, so for all practical purposes they can be considered identical. All that matters is the mass, which differs significantly between the pre- and post-1982 pennies. So I needed specimens to weigh.

I asked Barbara to pick me up $10 worth of pennies, twenty rolls of 50. She came back with only $5 worth, which is fine. But the reason she came back with only $5 worth is interesting. The bank clerk didn't have any rolls of pennies in her drawer. She had to go off in search of some, and finally found $5 worth in the back room. I knew that no one uses pennies any more, but I didn't realize that's apparently true of banks as well.

The US government desperately wants to eliminate pennies, which now (even made of cheap zinc) cost them about 25% more to make than their face value. The government stopped issuing actual coins in 1964. Before that, silver coins were actual coins. That is, a dime contained $0.10 worth of silver, and a quarter $0.25 worth. Post 1964, the government started issuing tokens, in which the metal content was worth much less than the face value of the token. People still called them coins, but they weren't. They were tokens. But by the mid-70's the government found itself accidentally issuing coins again, because the metal value of the copper in a penny approached and then exceeded one cent.

Obviously something had to be done to eliminate the actual value of the tokens. The government flirted briefly with issuing aluminum one-cent tokens, but was talked out of doing so on numerous grounds, not least that they would be toxic if swallowed and very difficult to locate with X-rays. So they went to the copper-plated zinc cents in 1982, and now find themselves once again in the position of unintentionally issuing coins rather than tokens. Nickels, with their 25% nickel content, are even worse from the government's point of view.

It's unfortunate that the government won't consider going back to issuing actual coins again, by intention. Revalue the currency to make silver worth $1/ounce and start coining silver dimes, quarters, half dollars, and dollars again. Bring back the silver certificates. Make our coins and currency actual money again, rather than the fiat currency it's been since 1964. Ah, well. The chances of that happening are zero, more's the pity.



I see there's a major collision imminent between Apple and Amazon. Apple wants its standard 30% cut on e-book sales, and there's no way Amazon can (or should) agree to that. Owners of iPads should be outraged at Apple's attempt to set up a toll booth for content, but if the past is any indication they'll not just tolerate this extortion but make excuses for Apple.

Here's how it currently works. Amazon sells an e-book to an iPad owner who clicks on the buy button from within Amazon's Kindle for iPad app. Amazon collects $10 for the e-book, of which they keep $3 and the author or publisher gets $7. Amazon does all of the work. The book is delivered from the Amazon server. Apple is not involved, provides no service whatsover, and is not paid anything. That's all as it should be.

Here's the way Apple wants it to work. Amazon sells an e-book to an iPad owner. Apple collects $10 for the e-book, of which they keep $3, and give Amazon $7. Amazon has to pay that full $7 to the author or publisher, and gets nothing for itself. What's wrong with this picture?

There've been two common responses to this in the comments sections of the articles that reported on Apple's extortion attempt. Most, the innumerate ones, suggested Amazon keep the price at $10 in their own store and raise the price in the Apple store to $13. The more numerate ones, alas a small minority, suggested that Amazon keep the price at $10 in their own store and raise the price for the same book in the Apple store to $14.29. Those schemes won't work. Obviously, Apple wouldn't tolerate Amazon charging Apple users a 42.86% premium, but more importantly that's not how the agency model works.

What's more likely to happen is that Amazon will simply pull their Kindle for Apple app. Any Apple user who wants an e-book will have to buy it directly from Apple, which by all reports I've seen is a grossly inferior experience. Of course, anyone who buys into Apple's walled garden deserves whatever happens.


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Friday, 4 February 2011
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10:37 - I'm back to reading printed books. I was half-way through one Beverly Connor mystery when the Kindle arrived, so I figured I'd better finish it before I forgot everything I'd read. Also, Barbara's brought me a stack of library books that I need to get read and returned so other people can have them.

I develop new habits easily, apparently. I remember back in 1993 or so when I was driving my mother to Greensboro for some reason. I'd been playing Chuck Yeager's Air Combat pretty intensively for the prior month or so. I-40 to Greensboro passes the Triad International Airport and is under the flight path. So, there I was, driving along I-40 at 65 or so when an airliner crossed at a couple hundred feet elevation. I actually pulled back on the steering wheel to climb and get on its tail.

So, last night I picked up the Beverly Connor novel, which I had bookmarked at the start of a chapter. I read those two pages and then pressed down with my thumb on the edge of the page to turn to the next page.

I've had quite a bit of email from readers about the iPad/Kindle issue. Most of them point out that one can simply download books from Amazon through the browser. That wasn't my concern. If Apple demands 30%, Amazon simply isn't going to agree. If Apple then kills the Amazon Kindle app, which they certainly could do and, based on past performance, are not unlikely to do, the iPad becomes unusable for reading Kindle books, period.

Amazon would hate to lose the iPad, obviously. They've been making a big deal about being able to read Kindle books on any device. But in the long run it really won't matter much to Amazon. They don't release sales numbers, but from what I've read it seems likely that Amazon is selling at least as many Kindles as Apple is selling iPads, and Amazon has only just begun to penetrate the market. Everyone I've heard from who owns both products has said that, compared to the Kindle, the iPad sucks dead bunnies for reading e-books. It's too big, too heavy, hard on the eyes, and has short battery life. With the continuing decrease in Kindle prices, I think it's likely that most people who own or buy iPads are likely to keep a Kindle for reading e-books anyway.



Speaking of the iPad, I see that Rupert Murdoch has introduced his new e-newspaper, solely for the iPad. He's charging a buck a week or forty bucks a year, which is about a buck a week or forty bucks a year more than most people are willing to pay for on-line news. Apparently, he's invested $30 million so far, with expected running costs of $500,000 a week. Since 50% of the subscription fee goes to Apple, that means Murdoch needs to have more than one million subscribers just to cover ongoing operating costs, and that's ignoring ROI. That seems very unlikely to happen. Murdoch continues to confuse Wall Street Journal readers with the general population, and I suspect the subscription numbers for his new service are going to reflect that in spades.

I mean, there are, what?, 10 million iPads out there now? Murdoch is expecting 10% of iPad owners to subscribe and continue subscribing? That seems very unrealistic, to put it kindly. Even growth in iPad ownership isn't going to help much. Now consider that Murdoch is the guy behind FoxNews, which is widely despised by liberals, and that Apple ownership skews liberal. In other words, Murdoch is trying to sell what amounts to FoxNews to a group of people who probably overwhelmingly voted for Obama. Of course, it's possible Murdoch will give his new news service a liberal slant. Possible, but not likely.

This looks to me like a slow-motion trainwreck in progress. I give it six months.


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Saturday, 5 February 2011
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00:00 -



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Sunday, 6 February 2011
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12:16 - I'm hearing from a lot of people who warn me not to let Barbara touch my Kindle. A typical story goes something like this: "My wife loves printed books and swore up and down that she'd never read e-books. Foolishly, I downloaded the e-book of the book she's currently reading, and showed it to her on my Kindle. Now it's her Kindle, and I have to read everything on my iPad."

Apparently, the average age of people who use Kindles is dropping dramatically. Originally, the Kindle was most popular among older people, apparently because it lets one turn any book into a large-print book. All of that changed fast over Christmas, when apparently millions of kids found Kindles under their Christmas trees. There's since been a huge bump in sales of Y and YA e-books.

The Kindle may do more than even Harry Potter did to, uh, kindle a renaissance in reading among young people. The New York Times ran an article the other day that talked about kids forgetting to watch their regular TV programs because they were too busy reading books on their new Kindles. This may be a temporary phenomenon. Let's hope not.



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