Established authors from mid-listers to the ranks of NY Times bestsellers are increasingly mulling over a tough question: do I re-up with a big-six legacy publisher for a multi-book deal (assuming one was offered) or sign a one-off with a big-six to publish an E-Original or do I take control and launch an E-Original on my own? I’m so confused… and where’s my drink?
Why the ruminations? Well,… even rising mid-list authors are seeing advances dropping and the number of titles per contract falling –while other terms remain flat or slide even further in the publisher’s favor. Thus, basic market forces are causing some authors to consider E-Originals. Those who have been paying attention have known this for a lonnnng time.
In a recent blog post my industry colleague and kindred spirit Richard Curtis pointed out the challenges facing the big six publishers in this area. I agree with what he had to say.
Let me elaborate and do the math… suppose a mid-list author is offered a $10,000 advance for an e-Original by a big-six publisher. After much wrangling, the author accepts the deal despite feeling like Ned Beatty squealing like a pig in the movie Deliverance. Important note: you never ever want to be Ned Beatty. Anyway, the author collected the advance, delivered the manuscript and waited a year for the first statement. It arrived along with a check for $2.61 (rough estimate) which included the usual set of nefarious deductions.
Alternatively, suppose the author publishes an E-Original (full-length novel at 120,000 words) at let’s say, $7.99 retail, and earns approx. $4.00 net per eBook copy sold from a digital publisher. At sales of only 2,500 books, the author will earn approx. $10,000 – which is the advance and the party has only just begun! Assuming the author is at least midlist and regularly attends to their audience, these numbers are not difficult to attain.
We can talk all day about math, and it’s a good exercise, but to me there is a much greater question: control of the author’s content IP. A digital publisher (full disclosure: I am CEO of PDP) can provide a better royalty (PDP gives 75% to the author and pays monthly), better term (PDP gives 3 to 5 years vs. a life of copyright) and allows the author to keep my ancillary rights such as Audio, TV and Film (be sure you keep those gems). Content is where the value is – publishers are not purchased for their teams. An author with a reasonable level of success that controls his or her IP for the long term will be in a much better position.
So, to me, the answer to the question “To E or Not To E” is not as much about E-Originals alone as it is about the authors deciding to take in control of their content library and demand better business terms along the way.
Don’t be Ned Beatty.
Happy Monday. Recently I was thinking deeply about something. My colleagues refer to such a preamble as a signal to start another pot of coffee and hide the white board markers.
I am now convinced that the eReader / tablet device war is heating up too fast and the orange that is about to be squeezed is content. The market is headed toward “free” devices and it is not far off. There you go.
Bear with me for a moment… Let’s look back at the history of mobile phones in the USA, something that I lived through and know in excruciating detail, free phones changed the game – and the consumer did not benefit in the long run.
Free Devices Drove Market Penetration.
This cannot be under-emphasized. Suddenly there were 2nd phones at home and college students could afford them. These happy entrants were not previously paying to be in communication with friends and family anytime & anywhere. The inflection point can be seen in the stock prices and M&A activity from 1999 – 2004 which was the golden era of the wireless industry in the USA.
It’s Not Free – It’s a Lease.
The free phone came with a 2-year contract and minimum monthly cost (a hidden lease). For those that used fewer minutes per month –OR– wanted a more economical monthly cost, they simply chose a basic phone vs. a high-end phone. Great for the consumer… and great for wireless carriers who now enjoyed the fruits of recurring subscription revenue. Subscription also leads to addiction – in some neighborhoods we call this “crack.”
Fallout – A Price War, Then Consolidation, Then Less Competition.
The free phone bonanza triggered a price war among carries and the victim in the mix was the price per minute. Minute plans grew to well-over 1,000 minutes for $50 per month – and eventually unlimited plans arrived. The carries eventually became less profitable and started consolidating (remember Cingular, VoiceStream and Airtouch?). This week MetroPCS and T-Mobile announced a planned merger followed by Softbank buying a massive piece of troubled and debt-ridden Sprint. The number of options available to the consumer is dropping. And, if you have been paying attention, the unlimited monthly plans are going away.
There is no magic or devil here – this is how the market works and sorts out the intended and unintended consequences of competition.
Now, let’s look at the eBook space and play out a scenario.
There are a ton of new eReader and tablet devices in the market and getting them into the hands of consumers is key to driving sales of content (duh). Causing this to happen faster will assumedly drive content sales faster (double duh). Free tablets with an associated monthly fee for content, anyone?
What if I offered you a free Kindle Touch and it came with a $19.99 monthly content plan that was a slightly modified Kindle Prime deal with a cap of 5 books a month? All the elements are in place today: devices, billing plans and content revenue sharing arrangements.
Now let’s say Barnes & Noble responds with a free Nook and $19.99 per month for 10 books?
There you go – as they say, “It’s On!” and the imputed average price per piece of content will quickly be squeezed.
When the financial war gets too bloody, as it certainly did in wireless, the giants will enter into a M&A phase to gain economies of scale and slow the erosion of profit margins. There will be fewer players in the eBook space and me thinks the fallout will happen MUCH faster.
It all starts then the first free eReader hits the market along with a monthly plan to buy books.
There is a lot more to this story and that’s for another day. Stay tuned.
Sitting here musing over coffee and a quick note came to mind…
Not too long ago I was speaking with a college student about his resume… and it mirrored a conversation that had just taken place with a colleague 15-years into his career. The topic was the relevance of the resume to the job search when the job search is for a position that is “out of linear sync” with the historical trend presented on the resume. Market forces or a career shift are causing this conflict every day.
Welcome to the new reality, folks. My point of view on this has evolved to this: careers are now 3-year chapters and in today’s hyper-fast market, each chapter does not seamlessly hand-off to the next chapter. In the past, careers often remained in particular industries where tenure led to deep sector knowledge. Today, new sectors appear (i.e… social networking) and spawn other sectors (i.e… social gaming) while driving new revenue models (i.e.. ad-driven freemium). An executive may play in all of the above over a 10-year (or less) period. Functional expertise and the ability to manage change and innovation from all corners of the enterprise is key.
The solution? I am not sure there is a universal solvent but there certainly is a new direction when presenting one’s CV to prospective employers. Here’s my brief take:
1) LinkedIn is key. The template enables presentation of projects, endorsements and references that augment and illuminate the linear history. If you are not building them, you need to start now.
2) Start with an objective that defines the job search in terms of your skills and what those skills will deliver. Think Moneyball (Go read it if you haven’t done so). Sports teams don’t hire players, they buy points and runs that win games. I strongly suggest NOT listing the title as the objective and simultaneously NOT being too abstract.
3) Summarize results and functional expertise at the top of the resume. I recently saw a “top-10″ list of specific accomplishments that appeared before the normal chronology. Brilliantly done.
4) Go easy on descriptive bullets that merely illustrate responsibilities. That doesn’t differentiate you and an “A” candidate and a “F” candidate end up looking alike. Think about it: Jay Cutler and Peyton Manning have the same responsibilities… Don’t be Jay Cutler.
Good luck -
The DBW eBook bestseller (this week’s list available here) list continues to underline a key point: content is king and people will pay the retail price for it.
Only a few books in the top 25 were available at ‘bargain” prices of $1.99 or less. Yeah, yeah, Scholastic’s Hunger Games and Random House’s 50 Shades of Mommy Porn take up more than a few spots. But Penguin deserves credit for 3 individual books in the top 25 (2 at $12.99 and 1 at $7.99). These legacy publishers are offering content that the consumer is willing to pay “full retail” ($9.99 or more) to read.
I’ll say it again, content is king and people will pay for quality books. I need to qualify that statement about quality because 50 Shades of Grey is the singularly worst written bestseller series of all time (that little fact is something MANY people in the industry wish someone would say out loud). Regardless whether the mob is following the fad or seeking a truly wonderful book, they are paying full retail for the top sellers.
PDP (my company) experienced this firsthand with the release of Greg Dinallo’s latest book – The German Suitcase. It cracked the DBW list (here) during the two-week launch phase when heavy marketing and channel promotions were in play. The bestseller list is a self fulfilling perpetual motion machine of sorts. Once on the list, books continue to sell which tends to keep them on the list. This, in turn, leads to PDP sending Greg a five digit check along with the first royalty report (ahem, PDP pays monthly).
Beyond the bestseller list, however, there is the ever-present line in the sand; discovery. Beyond this demarcation point, lies a treasure trove of great books at bargain prices (under $4.99). The trick is to get the titles noticed and that’s exactly where a violent two-pronged debate is raging. The first and sharpest prong is whether an author should perpetually encumber the rights to their next book unto a legacy publisher in the first place (the sub points in this debate include diminishing advances, accuracy of obtuse royalty reports, the rancid royalty rates themselves, returns, etc.). This invariably leads to the second prong: marketing and promotion (the sub points being that authors are increasingly pissed that they give away perpetual rights and don’t get perpetual marketing – well, at least effective near-term initiatives AND at the same time are expected to carry the bulk of the marketing responsibility).
At PDP, we don’t think there is much of a debate. Any fair minded person with a background in IP management will tell you that the legacy publishers continue to offer legacy deals that fall short of what many would call fair and reasonable compensation. That’s a whole other topic that I have written about before (here).
The inevitable fracturing and roll-up of the legacy publishers will eventually reach full pitch (Thomas Nelson was only the beginning…). Until then, the rules will change slowly but the authors DO have choices today.
“The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.” – Henry Ford
I find it interesting that continuous improvement is often billed as a novel strategy by reputable business consultants. I don’t think it is a strategy, a new technique or other form of bolt-on enhancement for businesses or individuals. Rather, I believe it is an outcome of the healthy practice of evolving products, companies and ourselves in response to, or ahead of, changing market conditions (customers, distribution channels, marketing, technologies, etc.).
In business, there are many applicable metaphors, but I prefer the military “volley rate.” Volley rate is defined as the time it takes to complete the 5 steps noted below. To apply this to business, simply substitute volley rate with “ad campaign,” “marketing program” or “product launch”:
1. Load the Canon (create ad campaign)
2. Aim the Canon (determine ad spend and placement)
3. Fire the Canon (launch ad campaign)
4. Canon ball flies to target (ad campaign runs its course)
5. Assess damage (assess sales impact)
In war, the faster volley rate wins as the faster side fires more often and, thus, hones in on their target. In business, particularly marketing and advertising, a faster volley rate means results are more quickly optimized and achieved. Think: A/B testing and running mini campaigns in advance of launching broader initiatives.
In your career, volley rate also applies. Technologies and markets are changing rapidly. Those individuals who regularly assess their skills and make education a priority (reading, taking seminars, attending conferences, etc.) will enjoy continuous improvement as a result of those efforts. When you say to yourself, “Wow, I need to dive-in and learn about this,” you are basically saying that your volley rate is too slow and something is getting ahead of you.
A job search is very similar, as the ability to hone your search with a fast volley rate is critical to shortening the search and landing a position that you really want – particularly if it’s a competitive market.
The over-arching lesson here is that in everything you do, a fast volley rate is critical. Along the way, the most important part of each volley is gathering facts (be sure the sources/facts are validated) and analyzing the results. Skipping that step means you are not aiming precisely – that’s called the shotgun method and it’s notoriously ineffective.
It has been a couple months since I wrote a “Career Coach” column. Sometimes they write themselves. Today was such a day as I had a wonderful lunch with a very cool college student. He’s in his Junior year and majoring in business. He is also thinking about starting a company – or at least taking a swing at the ball. This is of great interest to my entrepreneurial side, of course.
Anyway, he’s focused on planning the course load so he can graduate on time. At the same time he has been quietly developing a product idea born of his personal interest and a wide view of the people around him who would use the product. He knows he needs a business plan and wants to know what to do, when to do it, who to include in the venture – these are all the right questions.
He seems somewhat intimidated and confesses to not knowing exactly where to start. I explained that simply admitting that there are a ton of questions to be asked means his self-awareness is well-calibrated. None of us are born with all the answers – we all assimilated it from mentors, professors and individual study. Armed with that, we then march forth into the world and take a swing at some noble new business goal. I provided him with the Guy Kawasaki 10-20-30 business plan format and he took copious notes and asked many clarifying questions. I then sent him to a couple websites that would assist him in learning the process.
We also discussed social media and the need for personal reputation management. Like many students, he has a Facebook presence and uses Twitter as a mass texting resource to openly communicate aomong his circle of friends. Uh, sometimes too open. He was keenly aware of the need to moderate his tweets and posts as he looks forward to graduation in two years. This led to a very interesting conversation about social media from MY perspective.
We arrived at a discussion about a WordPress account where he could blog his thoughts about the process of starting his business and other things. That led to a discussion about LinkedIn and its function in the professional world as well as how Twitter plays a part in the tapestry of social communications.
By the end of the conversation he had two sets of notes:
1) Drafting the Business Plan for his product idea
2) Begin establishing his professional reputation today through a WordPress blog that automatically posts updates to Twittter and LinkedIn. Meanwhile his more personal life will be maintained on Facebook and he is going to clean up the archive.
What impressed me most was his strong desire to think ahead. He has two years of college in front of him and knows that is his priority. Along the way, he wants to “scratch the itch” and see if his product idea can come to life while using social media to establish what will eventually be his online professional reputation. As part of this he sought me out for advice and counsel. To him, his career is starting with the kickoff of his Junior year.
It shows me just how important it is to make time for the quality people who want to tap into our collective experiences. Frankly, as it turned out I didn’t have a lot of time today but it was a great conversation. I can’t wait for the next lunch with him.
I had a meeting and then a conference call recently with the head of a very successful production studio. They have several series on the air and are enjoying high levels of success. The topic was eBooks and how they can extend the on-screen brands to a line of eBooks that augments the experience. They also held title to a fairly large backlist of previously published books that could be revived as eBooks.
The meetings went well but the executive did not see the value that partnering with a publisher could bring to his business. The read we got was that production studios think about producing and being the producer. They had the budget and space with which to embark on building an eBook business from the inside of the media organization. Along the way, the executive had established some level of relationship with Amazon, presumably through the video side of the business. He felt that they can go it alone and achieve results.
The point that was seemed to be missing was this: businesses should do what they are expert at doing and seek expert partners for everything else. Establishing an eBook division using media teams is possible – but is is the highest best use of that talent and does it represent the fastest path to market and ensure the highest level of expertise? That answer is an emphatic NO. The studio will very likely achieve some level of results but they will have no way of knowing the relative status of their performance. A publishing partner can provide that data.
Discussions continue on-n-off and I remain hopeful that we can work with this studio as they have some exciting content.
Not long ago I had a meeting with a different studio, a smaller one without nearly unlimited resources and the deal efficiencies seemed to enable them to see the benefits very clearly and we quickly reached verbal agreement on all key deal points. In short order we had a very significant library in production with a great partner and are driving toward 2012 the holiday selling season.
There’s a lesson in there…
I read with interest a blurb tonight “Barry Diller and Scott Rudin in Talks to Launch eBook Publisher.” This is very interesting in a couple respects…
First, it clearly shows the desire of many (including my company Premier Digital Publishing) to break through the friction that prevented great content from easily moving around the ecosystem. Content (IP) usually gets stuck contractually at the point of origination. Interestingly, the point of origination (example: a traditional book publisher) usually only exploits one form – ie… a printed book.
Second, it shows that entrepreneurially-minded people are trying to establish new entry points or aggregation points. Rudin is well-known for his incredible body of work in film and taking books to film in particular. Armed with Diller’s vision and access to capital, an eBook initiative makes sense. It also allows projects to truly become multi-format releases.
It will be interested t see how this shakes out. This exact thinking is part of the vision for Premier Digital Publishing: Reduce Friction, empower IP owners (authors) and allow other formats of the IP to bloom in the media universe.
Premier Digital Publishing recently launched Premier Baseball Scorecard. The application is designed exclusively for the Amazon Kindle (eInk), so a bright sunny day at the ballpark is no problem.
The application has been created for baseball fans that love watching baseball and keeping score along the way. Baseball fans can now keep score for their favorite big league team, or track their favorite little league or softball star. Fans can start a custom season for their little league teams and track stats for each game over the entire season, or download each day’s rosters for every daily professional baseball game and be ready to go when the ump calls out “Play Ball!”
Why did we build an interactive eBook? Simple – the consumer has a wallet relationship with Amazon for multiple forms of content and all apply similar core competencies. PDP is not an eBook publisher. Our team, vision and revenue base are wider than that. Today, PDP is a leading independent digital publisher and innovator of eBooks, enhanced eBooks, print-on-demand books and interactive content. We are a team of digital media pioneers, and we now rank among the top publishers of quality eBook entertainment to the industry’s leading tablet and eReader manufacturers and eBook retailers.
That’s how we Play Ball!