Here are 10 signs you might be……….The Peanut Butter:

1) You can’t think of anything to show for your work in the last six months.

2) You think your job is to prevent mistakes from being made.

3) You believe that the more people invited to a meeting, the more successful the meeting will be.

4) Meetings take months to schedule.

5) You would rather be “politically correct” and “cc everyone” than make something great happen.

6) You’re paralyzed by the concept of “scalable.”

7) You think you have the upper hand in nearly all business dealings , but deep down inside, in those quiet moments late at night, you know you’re losing “control.”

8 ) You resort to bullying tactics to get your way without ever considering what might benefit everyone.

9) You spend your days trying to figure out how to gain control.

10) You’re an information hoarder.

Cut to this week when I have been asked for more FREE things than I ever remember. In one week, I received the following requests:

• Dozens of people (media, bloggers, and everyday ordinary folk) have asked for FREE tickets to a conference we’re hosting (And by the way, this conference business is supposed to be a revenue source because everyone wants their books for FREE these days. Turns out they want conferences for free too.).

• A TV Show wants 140 FREE books for the audience members. This seems to be a standard request these days. I’ve never quite understood how the author and publisher benefit from this, but it is practically expected.

• A blogger asked me for 100 copies of an author’s book for FREE to give away to his readers. He was writing a review. After much deliberation and hesitation, I agreed to 50 copies, which still seemed extreme to me.

At first I was appalled, and then I realized that maybe this is The Economics of Integrity…and maybe I should be going back to these requesters and making my own counter-requests…and maybe this is how the new economy works.

Whatever your point of view on this, the use of “monopoly” to describe a publisher’s control of its content is a bit overheated, no?  Maybe we can go back to calling it what we used to in the old days: “copyright.”

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

- A Tale of Two Cities, Charles Dickens

Decades from now, when we look back at the book business in 2009, it seems likely that we’ll see it as a threshold year, one in which all of the signs were there for what followed. It was a year in which sales held steady (Nielsen Bookscan, which covers 75% of the market, reported that overall unit sales through December 20 were 724 million copies, only a 3% drop from last year—and adult hardcover fiction was up an amazing 3%), and a few authors were so successful (Stephanie Meyer, Jeff Kinney) that the fates of entire publishing houses were altered by them; however, it was also a year that saw publishing’s profit margins squeezed in perplexing new ways. It was a year in which some of the most highly-respected bestsellers (Audrey Niffenegger’s Her Fearful Symmetry; Andre Agassi’s Open; Edward M. Kennedy’s True Compass) were also apparently the year’s biggest money-losers for their publishers, due to their multi-million-dollar advances; at the same time, some of the books with the highest rumored advances (Dan Brown’s The Lost Symbol; Sarah Palin’s Going Rogue) were likely the most profitable. It was a year in which e-book sales increased exponentially, with the cherry on the sundae being Amazon’s announcement that they had sold more e-books on Christmas Day than p-books (though of course this was helped by all the people who got Kindles as presents and spent the day filling them); but it was also a year in which the prices charged for those e-books made them a threat to the health of the p-book retailers on whom publishers continued to rely, and possibly a future threat to publishers’ ability to make money on the e-book format itself, in spite of that format’s wonderful ability to eliminate the costs of production, distribution, and returns. It was a year in which the largest publishing houses slowed title acquisitions and reduced the number of titles they published, while one company—Author Solutions—increased its annual output to a remarkable 24,000 authors (even more remarkably, these authors were all paying for the privilege). It was a year in which review coverage of new fiction disappeared almost entirely, and yet one first novel (Kathryn Stockett’s The Help) sold more than a million hardcover copies thanks to word of mouth alone. It was a year in which publishers continued to spend exorbitant amounts of money on print advertising, in spite of data showing how ineffective such advertising tends to be, but also a year in which some publishers discovered the power of online media to reach niche markets at significantly lower costs.

What does this mean for the future? That for every trend there will be a counter trend. And since this is the time of year for Top Ten lists, here’s mine:

1. Trend: The large publishing houses will continue to reduce overhead as profits shrink in the years ahead. Counter trend: Publishers will be looking for mergers and acquisitions to compensate for those shrinking profits. The Big Six could be the Big Three within five years.

2. Trend: These companies will continue to focus more resources on fewer titles, using their strengths as large-scale marketers and distributors to publish brand-names. Title count at the largest houses could drop by as much as fifty percent over the next five years. Counter trend: At the same time, self-publishing (including partnerships like the one announced recently between Author Solutions and Harlequin) will grow exponentially.

3. Trend: Title reduction will be most significant for new talent, with the largest houses entrusting support of new authors to a handful of editorial imprints. The editors at those imprints–editors with proven ability to choose new material successfully–will increase in value. Counter trend: Editors whose job is to handle existing talent will find their roles diminished.

4. Trend: In terms of advances, the amounts paid for brand-names will continue to increase, with seven-figure or eight-figure acquisitions commonplace among authors with established track records. Counter trend: There will be an increase in five-figure acquisitions (perhaps with profit-share arrangements) for less predictable material. The six-figure advance—that dangerous neighborhood inhabited by books with lots of potential but few guarantees—will become a rare species within the decade.

5. Trend: E-book sales will grow exponentially, with the proliferation of new devices and applications for reading on smartphones, etc… Within five years, half of all reading will be done electronically. Counter trend: There will be a resurgence of appreciation for well-designed physical books, as keepsakes, gifts, etc… While e-books will create a downward pressure on pricing, there will be notable exceptions (as seen this year with Carl Jung’s The Red Book, in great demand at $195.00, or Thomas Keller’s gorgeous Ad Hoc at Home, a bestseller at $50.00).

6. Trend: As more consumers become e-book readers, demand will increase for the availability of e-books simultaneously with p-books. Counter trend: Publishers will try a variety of strategies to meet this demand while not undercutting their p-book sales, such as offering more expensive “enhanced” e-books at publication and plain vanilla, less expensive e-books several months later (the strategy recently announced by Macmillan) or by offering a variety of “bundled” discounts to purchasers of multiple formats (prediction: within five years, it will be common practice to give every p-book purchaser a “free” e-book version of that book at time of purchase, as is already the case in the music business, in which someone who buys a cd can also listen to that cd on other devices in digital form, without paying a separate fee).

7. Trend: Fewer and fewer books will be sold to publishers at “auction,” and that practice will disappear completely within five years, as more and more publishers realize that the “winner” in such auctions—the publisher willing to pay more to acquire a book than any of their competitors–is often actually the loser in the end. Sales will be made either by brand-name authors to their previous publishing company or by new authors to carefully chosen editors with strong reputations. Counter trend: Instead of auctions for the highest advance, there will be auctions in which a basic advance is established by the agent, with the auction winner being the publisher who bids the most in marketing committed to the book.

8. Trend: As the initial sale becomes less of the focus for authors, the agent of the future will become more of a business manager who handles every aspect of an author’s career, overseeing the author’s online presence, developing sources of revenue outside of book sales such as workshops and lecture tours, and acting as the author’s publicist in between publications. Counter trend: Publishers will create free-standing departments whose services can be purchased a la carte by authors, whether that author is self-published or published by a competitor who doesn’t offer such services.

9. Trend: As the Boomers lose their eyesight and their children become teenagers, demographics will favor books for young adults over books for adults. This is also the generation most likely to embrace a variety of online and offline formats, without feeling the need to choose one over another. Counter trend: While auctions and advances diminish for adult titles, they could heat up for young adult material as publishers bet big in search of the next Stephenie Meyer. (Prediction: publishing houses will soon have entire departments devoted to developing books about the undead.)

10. Trend: Every year for the foreseeable future, books will be purchased between Thanksgiving and Christmas about how to prepare high-calorie foods (a favorite from this year: Fat: An Appreciation of a Misunderstood Ingredient, by Jennifer McLagan). Counter trend: Every January for the foreseeable future, the bestseller lists will be dominated by books about how to lose the weight gained by eating those high-calorie foods. (Not much of a prediction, sorry…but I needed a tenth trend to complete the list!)

Martin: When he first took over, A.G. Lafley at P&G was brilliant enough to realize they were missing a lot about the holistic consumer experience by sticking to things that were rigorously quantified. For example, when the company moved into beauty products, they were looking at face cream. And the scientists decided it must be about pore coverage. So they analyzed the hell out of pores and said ‘We can cover pores better than anybody.’ So when women in their research started talking about wanting to feel beautiful and desirable, they’d say, ‘Don’t talk about that. We don’t know how to quantify that!’ And they couldn’t understand why stupid women would go off to department stores and pay ten times more when they could cover pores just as well. Ten years ago, P&G couldn’t prove they could sell women billions of dollars of Oil of Olay face cream at $30-$60. They could imagine it, but not prove it. Lafley took it as a management challenge to see across the divide.

Fast Company: If you don’t have A.G. Lafley or Steve Jobs at the helm, how can you sell your organization on the idea of an intuitive leap instead of a scientific leap?

Martin: You don’t have to convert the whole organization to design thinking. Propose a little experiment–say, three months in length–where you test out a bite-sized chunk of a problem using this method. If you have a little success, be sure to then attach metrics to it. In that way, you turn the future into the past in a way they understand.

Click here to read the full interview.

Image: Latest book prices at Walmart.com

The argument over book pricing started to heat up with Amazon and then BN.com offering e-books at $9.99; now that Wal-Mart and Amazon have started offering the top ten industry hardcovers for $10.00 each, that argument is reaching a boil. Beyond the news stories about this “price war,” there is a lot of traffic on blogs, Twitter, etc…about what this means for authors and publishers. For instance, on today’s “ShelfAwareness” Robert D. Utter of the Other Tiger bookstore in Westerly, R.I. says,

What ARE the economics? How much money are these two behemoths losing on each sale when costs are taken into account? What would the P&L and balance sheets look like for this model? At what point is their behavior illegal and anticompetitive?

To answer him briefly, retailers pay publishers roughly 50% of the suggested retail price for books. For instance, when Wal-Mart buys a $35.00 book from Scribner, they pay Scribner about $17.50. If Wal-Mart then chooses to sell that book for $10.00, they are losing about $7.50 per copy sold. So, the “P&L” doesn’t look so good in this case for Wal-Mart, but clearly there are larger agendas involved for these companies, who are willing to use these books as “loss leaders” to establish their predominance on the retailing landscape. Their behavior is not illegal or anticompetitive; in fact, it would be illegal for publishers to tell any American retailer what to charge for a book; that’s why it’s called a “suggested” retail price.

The short-term results of this price war are some losses for Wal-Mart and Amazon, and some brisk sales for the publishers whose books have been chosen. But the “road kill” here are the accounts who can’t afford to participate in the race—traditional booksellers. And in the long term, these large retailers may succeed in convincing consumers that $10.00 is the right price for a book, whether digital or physical. That would put an enormous squeeze on an already-squeezed business, since of the $12.50 we get now for a $25.00 book, we spend about $2.00 to produce each copy, about $1.00 to market each copy, and another $1.00 or so on freight and warehousing, etc., leaving us roughly $8.50 out of which we must pay the author (who would get $4.25 if this were a profit-share, or $3.75 if this were a 15% royalty) and cover our significant overheads, before we end up with a slim profit.

Yesterday’s article made me wonder if there is  a shoestring equivalent for bookstores? Indeed bookstores have always been community spaces, and one doesn’t have to look very far to find examples of young booksellers who are trying to push them (back) in that direction. I’ll be interested, for example, to see what kind of events/ open mics/ classes Jessica Stockton holds at Greenlight Bookstore which opens its doors next week in Fort Greene (we’re rooting for you Jessica!). 13-foot-tall Lucite trees sound pretty cool, but at the end of the day creating a unique space where people want to hang out doesn’t necessarily require battery operated equipment. Or does it? I am curious what people think adds to the bookstore experience -

Even Chris had to admit that the experiment of giving away his most recent book for free in e-book form had been a mixed success. “Free” was given away to 500,000 people via various e-book platforms, but sold less than what Chris’s previous book had (“The Long Tail“). But as I told Chris after the panel, the problem wasn’t the experiment. The experiment was a great learning experience, and even if they sold only ten percent of the sales on “The Long Tail,” that would have been a success if the book had been done on a low advance/profit-sharing basis. The problem is when authors want to have their cakes and eat them, too…getting a large advance but wanting to experiment with free content models, or getting a large advance and then deciding that what they really want is more marketing. I love to experiment, too…but we should all benefit equally from the results.

While not exactly a pay-as-you-wish scheme, what he did was release the book in one-chapter installments as free downloads on his website over the course of a year. Now that all the installments are in, the book will be released as a paperback by Grand Central on September 8 with a first printing of 150,000. The jury may still be out until real sales numbers come in, but so far, with over 90,000 registered readers on his website, it sounds like Kiyosaki may end up as the next Radiohead success story.

I stumbled upon these great ads that Penguin Books did, which gives me hope that great ads do exist, even in the summer.

Aubrey Lynch from Tor arranged a little get together last Wednesday night at Lily’s in the city. I had such a great time talking books and publishing with passionate book peeps. One of the many topics covered was why Aubrey loves Prairie Lights. I asked her to write a a post explaining what makes it such a wonderful place:

A few weeks ago I made a trip out to Iowa–the order of business, meeting my boyfriend’s parents for the first time–daunting, to say the least. But one of the things I was most excited about doing while I was in Iowa City was visiting the infamous Prairie Lights Bookstore. Infamous in that it has a reputation for putting on great author events and for being a conscientious and passionate bookseller. How could I resist? I am a booklover to the core and was, at one time, an aspiring writer. Of course I had heard of the Iowa Writers’ Workshop and the fact that Iowa City is the world’s third City of Literature (as designated by UNESCO). With so much to recommend the city as one of the world’s centers of literature, I was hoping to find the bookstore I’d always been looking for—and wow, did I find it. Here’s what I found.

• Prairie Lights Bookstore felt homey—almost like I was walking into a room in my own house (well, that is, if I had a nice big house and not a “cozy” apartment in Brooklyn)—I can’t explain it—something just felt familiar, comfortable and safe about it. Maybe it was the warm colors or the carpet. Maybe it was the lighting. It was quiet without being a library and the people who worked there seemed very happy to be right where they were.

• What was most impressive was that scattered throughout the store—in places where people would be most likely to see them, were lists of book awards and the titles of the books that had most recently won those awards. Talk about making things easy for a casual browser who might have thought about reading mysteries in the past but didn’t want to risk spending money on a book that wasn’t that great and that would forever be their first impression of the genre (I say this because I am often that cautious browser).

• When I went to find the science fiction and fantasy section, right there, right smack dab in the middle of everything, was an announcement for the release date of the Robert Jordan and Brandon Sanderson book in the Wheel of Time series that fans have been anxiously waiting for! Here was the exact date that the book would come out—in November! And no one is paying them to do this. No one asked them. It wasn’t a sponsored announcement—they did it because they love the books and they are fans. Honestly, these are the types of people I want to sell me books—people who are anticipating the next book in a series, just like I am—people who love the work of authors and who love to tell the world about it!

• Cubes of bookshelves that you could see over—it opened up the room a lot—I never felt like I had to wonder about what was around the next corner—everything felt very open—the perfect word for the way the books were laid out, to me, would be “organic”—like following the paths your mind would naturally take.

• A café in the bookstore—not a bookstore in a café which is how I sometimes feel when I walk into a store that’s trying to do both. The focus is on the books, not the drinks they are going to sell you. It was tucked away on the 2.5th floor. It was quiet, without obtrusive music blasting—leaving readers to quietly sip and read.

• The people—Wow—the people who work in that store really know their stuff—they are fans as well—they love to read the galleys so that they know what books they can recommend to people before they come out—they have very specific tastes and even if they don’t read the types of books that you do, someone very close by will be able to help you.

• The owner works on the floor. This is important. The owner talks to readers/customers every day—the owner knows what the customers want. The owner cares about you, the books, the authors. The employees and the store.

• A newsletter from the store and community postings. This bookstore is all about the community—but not in a “self-serving, we only want to sell you stuff” kind of way.

There is so much more about this store that’s incredible but I think you should check it out for yourself to see:

Prairie Lights Bookstore

15 South Dubuque Street

Iowa City, IA 52240

http://www.prairielights.com/

I’d love to hear from others about what makes a bookstore great for them — , and then I’ll compile a list of the top 50.

And Juliet Grames — I want a post on “Why I’m a Borders Girl.”

I mean, I think the big issue online and the pressure publishers are feeling is that publishers online are having a hard time replicating the economics that they saw offline. And many of them are looking at that through the lens of copyright…. I think where I would just draw a distinction is I am not so sure that copyright is really the culprit in a lot of this…that that’s an imperfect lens and an imperfect remedy.

Listen to the podcast here.

 So the question is: can Book Publishers follow suit?  In a time where creative ideas are welcome, perhaps we need only look at Merge Records to realize that trust, cautious decision making and staying grounded may lead us in the right direction.

Click here  to read the article or here to listen to the intriguing piece.

I really enjoyed meeting Kristin McLean at BEA and invited her to post this essay on our blog:

A New Way Forward

Is it just me, or did anyone else notice the new glasnost at BEA? Gone is the Henny Penny panic we were all feeling in January, and in its place there is a palpable sense of problem solving and openness to change. What the change is, no one completely knows, but it seems that everyone is on board with the fact that it’s no longer business as usual. 

It’s quite refreshing, actually. Very few industries have the opportunity to revisit the business model in the way publishing is. There’s nothing like a hole in the boat to get the serious creative juices flowing.

John Foster Dulles, Secretary of State under Eisenhower, once said “The measure of success is not whether you have a tough problem to deal with, but whether it is the same problem you had last year.”

Ironically, this new era of creative problem solving might allow us to tackle one of the biggest problems we’ve had for many years—our distribution system. Quite literally, it is the most inefficient system in all of retail, and it’s costing us billions in labor, fuel, materials, and environmental karma. No wonder our margins are so low at every level of the industry. We’re subsidizing this system with duplicated effort, overprinting and un-saleable stock, wild swings in inventory, and lost opportunity because billing pressures force returns before books have had a chance to gain traction.

I came to the book business from the toy business about a decade ago after spending many years managing an indie toy chain. In each of our three stores, we had a full children’s book section—a store within the store. We carried a comparable amount of stock per square foot to a bookstore, and averaged a respectable 3-5 turns per year on each SKU. 

The section was twice as profitable as the average bookstore. 

Why? Because the buyer chose about half as many new titles, and went twice as deep on the ones she knew staff and customers would love. Key backlist was always in stock in two copies, and every effort was made to stock best-sellers and staff favorites. It was highly edited, full of personality, and well respected. Proof that you don’t need to have everything, just the right things.

And the stock was bought direct from the publishers, non-returnable. 

If it didn’t sell, it was just marked down and moved out. I must say, returnability seemed like a pretty screwy way to do things then, and I haven’t changed my mind much since.

I understand why our model developed as it did. I understand why, when general interest bookstores were the only outlet, returnability made sense. However, the general bookstore model is under heavy pressure, and I believe one of the most viable ways forward is to develop a retail model that emphasizes a strong curatorial eye, narrower choices, and a deeper commitment to our stores as unique places carrying a selection that isn’t duplicated anywhere else. You don’t need to have everything, just the right things. The Special Markets departments at many publishers already know this. Niche is the new black.

Moving to a non-returnable model will demand changes throughout the chain: Publishers will need to start publishing less frontlist and do more to nurture backlist; Authors will need to give up large advances in lieu of a higher cut of sales; and Stores will need to trim some space, wean themselves off the psychological comfort of returns, and commit to a different way of operating. 

Am I saying that all stores should start buying everything non-returnable tomorrow? Perhaps not, but I bet a percentage of buying from particular publishers could be shifted to non-returnable for a nice bump in the bottom line right away. I applaud forward-thinking publishers like Harper Studio who are trying to shift the paradigm. 

Do I think going non-returnable is going far enough? Frankly, when I look further down the road, non-returnability is neutral compared to other innovations like a pure consignment model—you pay when you sell the book, the potential of local print-on-demand,  focusing on selling the consumer a shopping experience as opposed to an object, and as yet unforeseen technological and consumer innovations.

All I know for sure is that we can’t evolve to our next model before we figure this out. Books aren’t going away, but they way we handle them needs to. I am hopeful that we can use a little of our bountiful creativity to re-imagine and reinvigorate our way of doing business.  If BEA is any indication, we seem to be heading that way.

Kristen McLean is the executive director of The Association of Booksellers for Children (ABC), a national non-profit trade association for the children’s book industry.

A recent Times article “Kickin’ Down Madison Ave., Feelin’ Groovy” cited the election of Barack Obama as the driving force behind the shifting of the cultural tide (they also cited the musical Hair??).The piece quoted several marketing executives and advertisers who said things like “The ’60s era embodies the culture of thinking for yourself and taking a stand.” This made me smile. And, lo and behold, companies like Proctor & Gamble, Macy’s and General Mills all have 60s oriented campaigns -and let’s not forget this year’s Barney’s Holiday catalog!

That same day I read an amazing Esquire feature by Colby Buzzell that was evocative of the 60s in a very different way. (Colby is writing a book for us called OFF THE ROAD in which he travels across America and documents his experience.) His cover story, “Down & Out in Fresno and San Francisco” is a Kerouac-esque portrait of the crack filled Tenderloin district in San Francisco, a neighborhood he calls “the pot of shit at the end of the rainbow.” The article is dark and dizzying. I have no doubt that Colby’s book will reveal some deeper truths about contemporary America, because that’s what he does. And that is why I’m excited to publish him. But this Times article made me realize something: At the end of the day, I guess I’ll be selling the 60s, too.

It’s the moment we’ve all been waiting for: the lease is finalized, the contractors are on their way, and we’ve got an opening date target for Fort Greene’s own independent bookstore! At last we can reveal the mystery location:

On June 1, Greenlight Bookstore became the official tenant of 686 Fulton Street, at the corner of South Portland — right in the heart of Fort Greene.

The space is about 2000 square feet — just right for stocking a wide variety of books in many categories, and for hosting great author readings and other events, while still feeling cozy. The funky layout has both wide open spaces and nooks and crannies, perfect for a quiet browse, for reading a picture book with a child, or for chatting with friends and neighbors over a cup of coffee from Marquet, right next door.

Follow Jessica on Twitter: http://twitter.com/booknerdnyc

Wow. I love them! Every service company should take note. And lessons.

Mark my words, next year there will be MUCH more of this type of thing.

Check out Comcast Cares on Twitter: http://twitter.com/comcastcares

and Comcast Bill: http://twitter.com/ComcastBill

and Comcast Bonnie: http://twitter.com/ComcastBonnie

Apple, Verizon, Cablevision, UPS, AT&T……take note!

Everybody likes new inventions, new technology. People will never be replaced by machines. In the end, life and business are about human connections…and computers are about trying to murder you in a lake. And to me the choice is easy.  – Michael Scott

Speaking of memories from the dental chair, this sketch from the Carol Burnett Show made us laugh.

Listen to John Wray read his novel on NPR.

I bring this up because I’m super excited about this year’s “Big Read” project centered on Henry James. This month there are events all over town including a panel discussion at Lillian Vernon Creative Writers House, a joint screening of The Heiress (1949) and Washington Square (1997) at the NYU Cantor Film Center, and a  walking tour of Henry James’s New York. While Liz Lemon may still (definitely?) win out at the water cooler, this NEA funded project is a valiant attempt to make reading more of a community based experience. You can view the entire schedule for the month by clicking here.

Yes, it’s true: In one of the great under-told media success stories of the past decade, NPR has emerged not as the bespectacled schoolmarm of our imagination but as a massive news machine poised for what Dick Meyer, editorial director for digital media, half-jokingly calls “world domination.” NPR’s listenership has nearly doubled since 1999, even as newspaper circulation dropped off a cliff.

[fast company]

5 Pillars of Ecommerce:

1. Selection
2. Value
3. Ease of use
4. Trust
5. Merchandising

I highly recommend checking out Wingo’s full analysis in which he explains what is widely known as the “Bezos napkin diagram.”

And how would you feel about having one micropayment system track your every move online? The idea that a functional micropayment system could somehow defibrillate the newspaper industry and solve “the free problem” is nothing new (enormous logistical challenges as well as questions about privacy have prevented anyone from making it work thus far). But yesterday’s roundtable discussion on the Freakonomics blog got the wheels turning in my mind. Here were some of my favorite responses:

“News is not like an iTunes song; it’s perishable.” – Marshall W. Van Alstyne

“It’s an unavoidable relationship: for good information to flow from journalists to readers, proportional revenue must flow the other way.” – William Baker

“Put another way, the fantasy that small payments will save publishers as they move online is really a fantasy that monopoly pricing power can be re-established over we users. Invoking the magic word “micropayments” is thus grabbing the wrong end of the stick; if online publishers had that kind of pricing power, micropayments wouldn’t be necessary. And since they don’t have that pricing power, micropayments won’t provide it.” – Clay Shirkey

[Freakonomics]

- Julia

Can anyone think of other comparable examples?

I found this particular ad on Houston Street so compelling I actually snapped a photo: Could there be a more of the moment message for a billboard downtown, (one that no doubt costs hundreds of thousands of dollars to rent) than….POP? That it replaces a long standing Yahoo ad makes it all the more brilliant. Good work guys.

- Julia

1. Publish too many bad books, get your sales reps to stuff the channel with too many bad books, and then complain that returns are too high
2. Not realize that, like other intermediaries, publishers are heading to extinction unless they learn to add value
3. Suffer from the illusion that after being in the publishing business for decades without a consumer brand, they can suddenly wake up and become meaningful brands in consumers’ minds

Praveen asked for our “top three stupid things independent booksellers do” in exchange; so here’s a list from our senior editor, Julia Cheiffetz:

1. Assume their customers wouldn’t transfer their store loyalty to a store website

2. Underutilize the expertise of their staff to curate selections and develop robust areas of expertise for which they are known locally

3. Fail to stay connected to their customers via a store blog

We’d love to hear from other booksellers (and publishers) with their “top three” lists in response…

(Photo: Mike McGregor)

In her wonderful article “The New Journalism: Goosing the Gray Lady” Emily Nussbaum reveals the genius behind the Word Train (namely Aron Pilhofer, Andrew DeVigal, Steve Duenes, Matthew Ericson, and Gabriel Dance) and boils our relationship with new media down to one, elegant sentence:

“That’s the way change happens on the web: The most startling experiments are absorbed in a day, then regarded with reflexive complacency”

Burger King has a new Facebook application whereby you actually get a real whopper when you delete 10 of your friends.

 No, I don’t. And neither do you.

 Ever since I subscribed to themediaisdying on Twitter I get dozens of updates a day reporting layoffs in print media, radio, television, advertising, you name it. Updates based on anonymous, unconfirmed tips:  A dozen layoffs at WGBH! The SUN-TIMES MEDIA is closes printing facility! 80 Jobs to go at MTV UK! A magazine editor friend of mine who used to poke fun at Twitter said she’s been “gobbling it up like candy.”  Well, so have I and, like a kindergartner the week after Halloween, I’m sick to my stomach.

Apart from the obvious irony of learning about layoffs in print media through a social networking platform, and the fact that we’re already saturated with bad news about the economy which contributes to our tooth-grinding dreams (or lack of sleep), themediaisdying feeds a kind of mob mentality that is unproductive at best. Did journalists at the Cleveland Plain Dealer worry about people at the Los Angeles Times during the Great Depression? Maybe they did. But nowadays when I log on to Facebook and see a so-and-so “is stressed” I immediately wonder: Did they get sacked? Should I call? Send a tweet? 

I’m grateful for the kind of grass roots mobilization that platforms like Twitter and Facebook enabled during the election season, and I love reading – in real time- about my friend’s baby’s first bath, but when it comes to the death of the media, I say all 7,339 of us Twitter subscribers hold hands and press “remove.”

Besides, as our favorite Twitter-rock-star-entrepreneur Gary Vaynerchuck said recently on his Twitter feed: “u can’t cry u just have to HUSTLE”

- Julia

As you might have seen in today's WSJ, at least one major book chain is giving non-returnable a try. We're hoping others follow suit…

- Bob

In the midst of all the doom and gloom about the book business, fifteen ABA member stores opened over the course of October and November 2008. Included among them are four new stores in Texas and two in California. (Please go to the one nearest you and buy a book today…we need to support these brave souls!):

Kaleidoscope Books, Cards & Gifts
One Milford Street
Upton, Massachusetts 01568-1339
(508) 529-0000

Kristy's Bookshelf
115 East Union Street
Morganton, North Carolina 28655
(828) 437-4828

Lakewood Ranch Booksellers
8111 Lakewood Main Street, #105
Bradenton, Florida 34202
(941) 907-9487

Legacy Books
7300 Dallas Parkway, Suite A120
Plano, Texas 75024
(972) 310-2049

Pudd'nhead Books
37 South Old Orchard
Webster Groves, Missouri 63119
(314) 918-1069

Revolutionary Grounds and Bookstore
606 North Fourth Avenue
Tucson, Arizona 85705
(520) 620-1770

Silver Ink Books
858 East Collin Raye Drive
De Queen, Arkansas 71832
(870) 642-2184

Storiebook Cafe
502 Northeast Bernard Street
Glen Rose, Texas 76043
(254) 897-2665

Stories
1716 Sunset Boulevard
Los Angeles, California 90026
(213) 413-3733

The Book Carriage
304 North Oak Street
Roanoke, Texas 76262
(817) 491-2858

The Green Arcade
1680 Market Street
San Francisco, California 94102
(415) 431-6800

The Green Toad Bookstore
198 Main Street
Oneonta, New York 13820
(607) 433-8898

The Horse's Mouth
1028 East Commerce Street
Buffalo, Texas 75831
(903) 322-2180

The Next Chapter
202 East Robinson
Knoxville, Iowa 50138
(641) 828-7323

Village Lights Bookstore
110 East Main Street
Madison, Indiana 47250
(812) 265-1800
 

In addition, Jenni Bick Bookbinding, which previously sold only stationery items, added books to its mix.

Jenni Bick Bookbinding
53-B Main Street
Vineyard Haven, Massachusetts 02568
(508) 696-3929

photo credit: MorBCN

How much does packaging matter for books?

The old adage of “never judge a book by its cover” is becoming totally irrelevant. As the Kindle and other e-reading technology goes mass (yes, it is inevitable), what you’ll see is a polarization of the book-reading experience. Just as mp3’s killed the CD but oddly enough revived records and mixtape nostalgia, books will split into two camps: the cheap digital format to satisfy our need for disposable convenience, and the increasingly rarefied format of ink and paper to satisfy our need for beautiful objects and “authentic” experiences. The aesthetics of the physical book are increasingly important because it’s becoming fetishized. Like have you seen the hardback Penguins designed by Coralie Bickford-Smith? Just gorgeous.

Research shows that women represent about 70% of the book buying market. Why do you think that is and how can publishers target men more effectively?

One of the most obvious reasons is simply that women are more socially communicative, so they do things like join book clubs, and tell other friends about what they’re reading. I think this is changing somewhat due to online social networking. Not many men will join a book club, but what they might do is add an app like iRead or Visual Bookshelf on Facebook and passively (and selectively) communicate to their friends what they’re reading.

I’ve also noticed that a lot of men are very interested in the Kindle and e-Readers. Not just because it’s a gadget but because the convenience and privacy of it is very appealing. I think the fact that you can be reading it anywhere without a flashy cover displaying what it is you’re reading is actually a big advantage for guys who tend to be more shy about sharing their lit predilections in public. I mean, you don’t necessarily want everyone to see you’re reading a self-help book or a lesbian vampire novel! I’m Japanese and it’s interesting to me why more people don’t cover their books here, because in Japan any book you buy at the bookstore is covered for free at the register. I know it sounds like a marketing disaster, given that you’re covering up free advertising, but I feel like there’s something to that. Reading is a very personal activity for most of us.

Someone once said “hiring a consultant is like paying someone to tell you what time it is- with your watch. Only after the project is finished, they walk away with the watch.” Should publishers enlist the services of firms like McKinsey / BCG to hone their strategy?

There are so many consultancies out there with different approaches to problem-solving, it’s hard to say without getting more specific. In general, if you’re talking about fixing the way publishers run their business from an operational perspective, I would think that the services of a management consulting firm could be beneficial. The number of books returned to be pulped is outrageously wasteful and the astronomical advances for certain authors have proven to be unsustainable in light of falling sales. And while I recognize that everyone is tightening their belts now, the extended run of freedom that publishing people had with their corporate Amex was completely out of touch with the realities of running a profitable enterprise—remnants of a glamour-industry approach that was long obsolete! I don’t think you needed to be a management consultant to see that something was rotten, but really taking a scalpel to it oftentimes requires external intervention because it can be so painful. And to your point about walking away with the watch, I definitely think that consulting fees need to come way down for the relationship to make sense.

Can you point to any one marketing campaign for a book that particularly stood out as being excellent?

To be honest, I really can’t think of a single book marketing campaign that has really stuck with me.

What can publishers do to make books “cool” to a younger generation? 

Assist the Obama administration in its efforts to improve education. You can’t brush your teeth if you don’t have running water.

-Julia

Throughout your career have people warned of “the death of print” and, if so, how is this time any different?

Well, not to be rude, but duh! My time includes not only meat rationing but no television for about ten years, and after that huge, crate-like wooden boxes with 4″X4″ black-and white-screens, on which strange, target-like  test patterns provided a majority of programming.  Traditional publishing has, generally,  always provoked the same kinds of complaints and lamentations–see Mark Twain’s letters to his publishers about skimpy distribution, and the correspondence between Bennett Cerf and Donald Klopfer about the creative accounting required to record some of the razor-thin profit margins of Random House’s early days.  So no, while everyone has been telling the same evergreen stories about the dire state of publishing for centuries now, no one warned very loudly about the “death of print” until computer technology and the Internet evolved into a real threat. Ten years ago? Twenty at most, I would say–though science-fiction writers and visionaries like Ted Nelson may have foreseen this evolution earlier. Even though the e-Cassandras have been at it for a decade or two now, this will not turn into an evergreen story, unless somehow, miraculously, e-publishing subsides into being a mere a niche of traditional publishing, when the reverse seems to me far more likely. This promises to be a major structural and qualitative change, rather than simply new clothes for an old model.

Does a good editor have to have good business instincts?

Book editor? Yes–if she or he is to survive.  But since the success of books is for the most part such a random matter (as Nassim Taleb explains in “The Black Swan”), no matter what anyone tells you, “instinct” is the right word.  Because numbers and comp titles and previous successes and the state of the marketplace and current events and all the other supposedly rational factors that go into what is called “planning” in publishing, as with investing, will generally do the planners no better than throwing blindly at a dartboard made of book jackets,  in terms of prediction. But there are some people who do seem to have a “knack.” I won’t say who I think they are, but I will point to some recent examples among  popular music producers–Ahmet Ertegun and Jerry Wexler and John Hammond–who discovered Bob Dylan, who was referred to at his label, Columbia, as “Hammond’s folly” until he started setting one sales record after another.

In Leon Neyfakh’s recent Observer article “What Makes Moguls Believe They Belong In the Book Business?” Eric Wolff said he hoped publishing would “return to what it once was, and what it is probably best suited for: a prestige business for rich people.” What do you make of his statement?

It seems possible, for some boutique operations, but the huge electronic shift I believe is coming seems to me far more important to the dissemination of text of all kinds than does the continuation of “book books.”  E-readers will get to be really, really good in less than five years, I would bet.

Is there one book you particularly regret not having published?

Atul Gawande is the contemporary  writer I most regret not having been able to acquire.  Pride and Prejudice, Great Expectations, The Great Gatsby, Lucky Jim, and Catch-22 are all books for which I would have loved to serve as a paraliterary (that’s what an editor is, essentially). Right now, an association with  Henry Hitchings’ “The Secret Life of Words” seems enviable.  I’m glad you didn’t ask me about books I regret publishing. Or perhaps I should say, having to publish.

What was the most difficult aspect of being Editor in chief at Random House?

The coffee in the pantry, the sun in my eyes from my panoramic river view–very annoying–and you, in your more stubborn moments.

Are you confident a younger crop of book editors will evolve into the Fisketjons and the Loomis’s of today?

Well, there will always be people who can help to make writing as good as writers themselves would make it if they were always writing at their highest level. That’s what I think good editors do, essentially.  And some of those editors, no matter what their medium is–print or pixel–will be supremely good at it, like Bob Loomis.

Why aren’t you on Facebook?

What is Facebook, again? 

Name three books that changed your life.

Paul de Kruif’s “The Microbe Hunters,” the aforementioned “Catch-22,” by Joseph Heller, and Theodore van de Velde’s “Ideal Marriage”  (which I purloined when I was ten). (or maybe my parents put it there on purpose. Probably. They resupplied  that shelf soon with a more up-to-date book called “A Marriage Manual.”)

Can you envision a future in which people would simply self-publish online without the help of an editor or publisher?

No, but I can and do see something closer to this than the model we have now, which appears at the moment to be breaking up like Arctic ice. I see consortiums of writers or single, bankable writers selling their books, e-books, directly–especially if the techies can come up with non-print-outable and non-forwardable texts–and paying editors and publicists and marketers to help them with editing and marketing. No more 15% royalties–each sale, at, say,  $9.95, might well mean $8 or $9 revenues for the author. Probably can’t happen exactly that way, though: bootlegging and all.

How would you characterize the state of contemporary fiction?

With the 2008 election as a touchstone and with notable exceptions like Aleksandar Hemon’s “The Lazarus Project,” generally Arkansas-esque.

-Julia

[photo credit: Nicole Bengiveno NYTImes]

• It gets much worse before it gets better.

• Online advertising demonstrates it isn't immune to gravity.

• Media ownership consolidates.

• Ad pullback whacks big broadcast TV networks.

• A picayune change in how magazines count circulation is O.K.'d by industry arbiter Audit Bureau of Circulations.

• New York Times Co. (NYT) sells About.com to buy time for its flagship paper.

• A sort of shadow media industry is born—properties created and staffed by those pink-slipped in '08 and '09. This sets the stage for epic clashes with existing players in '10 and beyond.

[Businessweek]

“ADISN is a next generation Digital Ad Agency that uses relationship data from the social web to enhance targeting I.E. we have a GRIP of 
technology. ADISN has proven that the aggregate of web conversations, web profiles, online blogs, and behavior create millions of relationships between seemingly unrelated topics. Our technology mines through those relationships and applies the strongest ones to enhance online targeting to the benefit of publishers and advertisers across the web. We call it Relationship-based Targeting.”

“The Tumri AdPod marries advanced targeting capabilities with a dynamic, interactive presentation layer, enabling advertisers to craft highly targeted marketing messages to consumers on-the-fly. The Tumri platform seamlessly deconstructs ad creatives into core sub-components (i.e. brand logo, background image, product image, offer/price, call to action, attention grabber, etc.), then allows advertisers to adjust each sub-component by targeting or performance parameters.

By delivering the right message to the right audience at the right time, advertisers and publishers can now cut through the clutter of irrelevant content that overwhelms consumers online today.”

Joi ito is an activist, entrepreneuer and venture capitialist.

1) Can you explain what Creative Commons is to people who might not know?

Creative Commons is a non-profit organization headquartered in the US with partners in 49 jurisdictions and relationships with groups in approximately 80 countries.

Creative Commons makes copyright licenses available without charge to anyone who would like to facilitate the sharing of their work. Authors decide whether the works can be used for commercial purposes or whether derivative works have to also be relicensed under a similar Creative Commons license. Once the author has made the choices, there is a simple tool on our website which creates the appropriate license. By pasting the code onto the website or embedding it in the work, the work is marked with a Creative Commons icon. When the icon is clicked, anyone wishing to use the content can see the Creative Commons “deed” which clearly shows what you can and can’t do with the work. This is what we call the “human readable” deed.The license also provides “machine-readable metadata” which get embedded in your work or website which allows services such as Google and Yahoo and various editing program to automatically understand which licenses are attached to which works and the original owner of each part of each work.

The key reason for using these licenses is to create an open and interoperable specification so that each time, for instance, that a professor from one university wants to incorporate works from another professor in their curriculum, a legal team does not need to get involved in reading the licenses of both works and negotiating a contract. If the professors have marked their works with the appropriate rights, for instance “as long as you provide attribution, please feel free to use without any other restrictions.”
 

2) Does Creative Commons have different implications for different forms of media? Would books be affected differently than music, for example?

Absolutely. One big difference relates to the underlying business models around the works. When you make the choices above, Creative Commons licenses end up in the form of six basic forms. The most permissive allows users to do anything they want as long as they provide attribution. The most restrictive licenses do not allow derivative works and commercial use or allow derivative works but force the derivative to also be Creative Commons licensed.

In the case of book publishing, we have seen a variety of different examples. The basic consideration is how much demand the book already has versus the potential demand that a free download version of the book might create. Clearly there is some cannibalization of sales if people who were going to buy the book end up reading it online. However, we have quite a bit of data which supports the fact that making the book available for free increases the likelihood that the book will get stronger coverage on blogs and word of mouth and also find its way into markets not typically marketed to by the publishers. If, for instance, one allows derivative works, a good book will often quickly get translated, whole or in part, which can drive demand in International markets.

3) With regard to e-commerce, you talk about the value of getting more money from fewer people as opposed to a little money from a lot of people. Can you elaborate?

Before e-commerce the cost of manufacturing, packaging, shipping and selling content in the form of books, videos and CDs was very expensive and cost intensive. It was very difficult for a musician, for example, to be in touch with their fans directly, especially from a commerce perspective. The way that a fan “touched” a musician was typically by buying a standardized sized and priced CD at some megastore, a majority of the cost going to the distribution and manufacturing system.

Now, with the Web and e-commerce, many of these restrictions are no longer a problem. For example, when Nine Inch Nails released “Ghost”, they made the music downloadable and available for free under a Creative Commons license. They sold a 2500 copy limited edition boxed set for $300. They also had a $70 luxury edition with a photo book as well as various other versions. They had very little transaction “friction” and were able to design the experience so that the fans were interacting directly with them instead of through a florescent lit cashier at a megastore. They were able to sell $1.6 million in worth of product in one week and sold out the special edition in one day. Prince also makes millions of dollars a year from fans who pay to be members of his website fan club.

We are now shifting from what I call the “delivery problem” to the “discovery problem.” Whereas the difficulty use to lie in the mechanics of getting the product to the user, now the challenge is getting the attention of the customer. How do I find the product that I’m interested in?  In the past we had the stack of best sellers at Border’s and MTV that helped create a mass demand on marketed product, but in the world of increasing choice and diversity, the discovery problem is a real one.

4)  What is the best business decision you’ve made?

My passion and my background is in main stream media – motion pictures, music, journalism and television. The best decision that I made was to become an Internet entrepreneur to help build the Internet which, increasingly, allows anyone to participate and innovate without asking permission. While this causes a variety of problems and risk for professional media, I believe that in the long run, it will greatly enhance the quality and diversity of our culture.

"I recently, for the first time ever, subscribed to the New York Times….I would pay for subscription services, which would give me good,
trustworthy news that I trust has been fact-checked and all that. So I
do think subscription services will work, but that's for upper-middle
class and above. I think we're going to see a return to the sponsorship
model that we saw in the '50s and '60s on TV." [LA Times]

- 29% of U.S. shoppers impulsively buy from categories they didn't plan to when they entered the store. Of that group, 24% said they were influenced by secondary displays (away from the product's usual aisle), 18% by in-store demonstrations, and only 17% by price promotion.

- 39% of U.S. shoppers have a category in mind but pick their brand in store, and of those, 31% were influenced by in-store demonstrations — more than the 28% by price promotion and the 27% influenced by some other form of consumer promotion [Ad Age]

What does this mean for books?

Here Carr talks about the evolution of his relationship with Google and why, for example, Schmidt & co didn’t go to great lengths to publicize their new video chat function. In a line: “The most powerful form of advertising is to be exceptional.” [Google Seduces with Utility: NYT]

In the past week, there have been a cluster of book deals reportedly in the well-to-do gated community of $7 million.  These unconfirmed reports include books by Jerry Seinfeld, Tina Fey, and as of a rumor today, Sarah Palin (perhaps the last two could be sold as a boxed set?). 

For those of you who want to play along with this “bet the farm” game at home, we’ll tell you that a rough profit and loss estimate on a book with a $7 million-dollar advance, a $24.95 hardcover list price, average costs for production/marketing/publicity/sales, and no foreign sales (assuming that Seinfeld/Fey/Palin have primarily American audiences…or that alternately, when a $7 million-dollar book has foreign potential—such as the Warren Buffett—the author/agent keeps control of those rights) has a break-even of 900,000 copies.  In other words, you have to believe that you will sell more than 900,000 copies to make money on these books.  Place your vote in our comment section, and we’ll report the tally in a future blog:

 1. Jerry Seinfeld's new book
      a) will lose money b) will break even c) will make money
 2. Tina Fey's book
      a) will lose money b) will break even c) will make money
 3. Sarah Palin's book
      a) will lose money b) will break even c) will make money
 4. Warren Buffet's Snowball (his authorized biography reportedly went for about $7 million also)
      a) will lose money b) will break even c) will make money

Guess all four correctly (and we won't know until The Fat Point-of-Sale Lady sings) and you get your own table at Michael's…

Bob

1) Why do you think companies continue to pay for online ads when the metrics show they don’t work?

My first response to this question was that they do it for the same reason atheists pray to God: what if he actually does exist? It couldn’t hurt to get a message in front of Him.

I think it’s the same with online advertising. I think companies these days almost feel an obligation to have a presence on the web. This is the brave new world of marketing, much maligned and much misunderstood, but nevertheless an important wave 
of the future. Everyone wants to get experience on the web so that they can learn and not be left behind. Online ads are easy to create, easy to track and they are a relatively minor investment compared to traditional advertising vehicles. I think there’s an “I’d better be there” attitude when it comes to online ads and they’re the path of least resistance on the web. But as marketers get more sophisticated with web marketing, online ads are less and less prominent in favor of more interactive, seamless and community-oriented web activities. These are much more complex to create, execute and maintain.

You know, like everything else, when advertising is done right – with the right messages aimed at the right target – it can be gold. We have one client who’s been running a banner ad that’s delivered a better return for them than any other message they’ve ever run. It’s been running so long they’d like to do something else, but it’s too successful to remove it.

 2) Does Peggy Olson accurately portray what it was like to be a young ambitious woman in a Mad Men’s world?

In the 1960’s, there may have been a few icons in the advertising business, like Mary Wells, who had the chutzpa of Peggy Olson, but even when I entered the business a decade later, women weren’t typically that aggressive. I mean Peggy really stands up for herself in situations when the men are happy to accept her work and then take the credit for it themselves. She also demands recognition for bringing in a piece of business single-handedly (truthfully, it is rare to accomplish anything in the ad business single-handedly) and she negotiates a great office right next to her boss. When Don Draper finally comes back to work and sees where Peggy is located he says, “Am I working for Peggy now?”

One thing that I think might be accurate, though, is the mistake young women often made by getting involved with married men. I saw this a lot when I was young, but I don’t see it or hear much of it now. Young women seem to have too much self-respect to get entangled in relationships with married men.

3) If you had one piece of advice to give to young women in the corporate world, what would it be?

Find a mess and fix it. There’s no better way to get recognition, respect, gratitude and advancement.

Nina DiSesa is the author of Seducing the Boys Club

1) We have a fresh slate at HarperStudio. What’s your advice?

The huge opportunity for book publishers is to get unstuck. You’re not in the printing business. The life and death of trees is not your concern. You’re in the business of leveraging the big ideas authors have. There are a hundred ways to do that, yet book publishers obsess about just one or two of them. Here’s the news flash: that’s not what authors care about. Authors don’t care about units sold. They care about ideas spread. If you can help them do that, we’re delighted to share our profits with you. But one (broken) sales channel–bookstores–and one broken model (guaranteed sale of slow-to-market books) is not the way to get there. If you free yourself up enough to throw that out, you’ll figure out dozens of ways to leverage and spread and profit from ideas worth spreading.

2) If everything is free, how is anyone going to make any money?

First, the market and the internet don’t care if you make money. That’s important to say. You have no right to make money from every development in media, and the humility that comes from approaching the market that way matters. It’s not “how can the market make me money” it’s “how can I do things for this market.” Because generally, when you do something for an audience, they repay you. The Grateful Dead made plenty of money. Tom Peters makes many millions of dollars a year giving speeches, while books are a tiny fraction of that. Barack Obama used ideas to get elected, book royalties are just a nice side effect. There are doctors and consultants who profit from spreading ideas. Novelists and musicians can make money with bespoke work and appearances and interactions. And you know what? It’s entirely likely that many people in the chain WON’T make any money. That’s okay. That’s the way change works.

3) How do you think publishers and authors could work more productively together?

Publishing is far too focused on the pub day. The event of the publication. This is a tiny drip, perhaps the least important moment in a long timeline. As soon as publishers see themselves as marketers and agents and managers and developers of content, things change.

4) What’s the most important lesson the book publishing industry can learn from the music industry?

The market doesn’t care a whit about maintaining your industry. The lesson from Napster and iTunes is that there’s even MORE music than there was before. What got hurt was Tower and the guys in the suits and the unlimited budgets for groupies and drugs. The music will keep coming. Same thing is true with books. So you can decide to hassle your readers (oh, I mean your customers) and you can decide that a book on a Kindle SHOULD cost $15 because it replaces a $15 book, and if you do, we (the readers) will just walk away. Or, you could say, “if books on the Kindle were $1, perhaps we could create a vast audience of people who buy books like candy, all the time, and read more and don’t pirate stuff cause it’s convenient and cheap…” I’m a pessimist that the book industry will learn from music. How are you betting?

5) You talk about all of these inspiring people in TRIBES. Is there anyone you had to leave out that we should look into?

There are so many inspiring people out there, you see them at every turn. As someone considering the opportunity to lead, I don’t think you need more examples than the ones I’ve got in the book, I think you need to think hard about what’s holding you back. It’s not for lack of proof or from a paucity of examples, that’s for sure.

What kind of online marketing works?
I think the building or seeding of buzz online is important–as with film, music or TV, word of mouth is invaluable.  That buzz can come through building relationships with bloggers, writing posts that you then try to get linked to, starting up a social network or “fan” group, and/or creating original online content.  The main thing is just to be out there–be writing, be posting, be Twittering, be engaging in conversation with other people in the blogosphere.

Should publishers build websites for their authors?
Ideally, they would all have a mechanism for the authors to be featured online–the publishers’ homepage, etc.–and/or perhaps kick in part of the budget to build one.  But a website is the kind of intellectual property that an author may want to own.  As you well know, authors frequently move houses, so if publishers owned author sites, it would be problematic if an author leaves.  Also, certain authors might have ventures beyond books that they want to feature online.

Do you believe social networking can be leveraged to sell books?
I’ve joined a number of Facebook groups for books, which allows the author to email the members of that group about onsale date, notable publicity features, etc.  There are also fan pages for authors through which like-minded readers can find each other.  It’s a way to speak directly to your audience.

You and I have cooked up some of our projects together. Is that something you do a lot of?
Somewhat.  It depends on the editor.

Name two websites or blogs you love that most people haven’t heard of?
Fimoculous.com and Kottke.org

-Julia

The print edition will publish weekly.

WHAT DOES IT ALL MEAN?????

Debbie

The launch of these APIs is huge for two reasons:

1) It means the Times is recognizing the immense value of making the data in their archives available (a traditional search is way limited compared to what a nuanced API can deliver).

2) The Times is signaling a willingness to share the vast amounts of data they’ve collected for non commercial uses. And, as an added bonus, the Times will be better able to track the queries people make of their interface and use that data to their advantage.

Several content providers / media companies have created APIs (just take a look at Mashery) to give users access to customizable data. One example is Netflix’s recent API for Blackberry. Listen to Netflix engineer Michael Hart talk to the guys on thesocialweb.tv about Netflix’s API (really, this is worth checking out).

So, how is all of this relevant to book publishers? Well, now that we’ve invested in scanning our books and creating digital archives, the huge question becomes: what do we do with all of our content? Do we look at a subscription model like Netflix? Do we follow the lead of the New York Times (which has only just dipped a toe in) and create an interface that makes content available to all? And, if so, how do we make sure that our authors get compensated for their work?

Julia

They also make a point of saying reviews are non refundable! I’m curious to hear what people think of this. Is charging an author to review their book any different from charging a publisher to place a book…at the front of the bookstore?

Julia

1. We’ve heard a lot of doom and gloom about the publishing business in recent days (last week’s article by Boris Kachka in New York magazine, for instance), but the biggest bestsellers are selling more copies than ever before.  If bestsellers are doing so well, why is the business in trouble?

I do not agree that it’s all doom and gloom in the book business. Obviously, these are challenging economic times and for our industry as well. Like all of retail, our business is impacted by the overall economic environment and by industry trends and that’s why we are managing our company conservatively from a financial perspective.

That said, I think people are always going to want books…they will always want to be entertained and informed by books and I do not see that changing.  It’s true that the format books take may change over time and evolve, and the places where people buy books and how they access them have changed over time and will change further, but books themselves will always be part of our culture and our world in my opinion.

I think what has changed the most is that there are now more outlets for consumers to purchase bestsellers.  Certainly, the internet, the warehouse clubs and discount stores were smaller stakeholders just some years ago and have grown to large ones today.  It is a changing environment.

As far as bestsellers, they are not the biggest part of our business as a retailer. Bestsellers for Borders represent about 15-20% of our total book sales. Clearly, most of our business is driven by our backlist, which is the most important part of our sales as a retailer and the most challenging to get precisely right from an inventory standpoint and that’s one of the things we are working on right now.

Look at it this way.  When we can host midnight Stephenie Meyer “Breaking Dawn” parties in our stores that bring 225,000 people out to Borders on one night and we sell over 250,000 copies of the book in one 24-hour period, does that seem like a dead business? It’s exciting and proves that the book business can be full of vitality if you have great content and give the customers compelling reasons to come to your store. With more and more demands on people’s time, a specialty retailer like Borders needs to do everything we can to drive customers to our stores. We cannot simply rely on the bestsellers, which are now available in more outlets than ever.

I contend it is not the book business itself that is lacking, but it is the business model that has been in place for decades and is broken. The entire lack of focus in the industry on inventory productivity has put us all in a very challenging situation.

There are now more books than ever being published.  Publishers bring us thousands of titles each month and many publishers are not as focused on the sell-thru of their titles as the buy-in. We are working together with our publishers to help change that mindset. Their focus has been on opening order from the retailer and not always on the net quantity sold after returns.

In the past, our buyers would essentially buy a significant number of all titles in their attempt to have us covered in terms of inventory. But this practice has wrought a broken business model because when these books don’t sell, they are returned…a costly process for the publishers and for us.

In my career, I haven’t seen a retail model that operates like this and it needs to change dramatically and fast.  Inventory productivity is a HUGE initiative here at Borders.  We are very focused on buying smarter to start with and have teamed up with our publisher partners to figure out from the start the right buys at the right level that will actually sell thru at acceptable levels, thereby mitigating the returns.

In addition, we need to work with publishers on logistics.  We need to get more just-in-time with inventory deliveries so we can more effectively distribute books based on their selling in individual stores.  In many cases It would actually be better economically for publishers if they held the inventory and made it quickly accessible to us when we are selling a title than to ship it all in at once and have us hold excessive quantities on the idea that maybe it will sell and then when it doesn’t, we ship it back.  Some publishers have started using staged deliveries which are common practice for most retailers in non-book product categories, but it is still not an industry-wide practice for books and is one of the easiest things we could do to increase efficiency quickly.

What to do?  We need to work closely with publishers on maximizing inventory productivity. That is not just our job as a retailer, it is the job of the publisher and retailer TOGETHER to realistically assess sell thru and take on only those titles and quantities we both think will perform to the degree we need them to. We need to buy smarter…know our customers and select those titles that resonate with our unique shopper. Together we need to address logistics and get more “just-in-time” with shipments.

Finally, at Borders, we are rolling out the new Borders.com e-commerce site on our in-store kiosks so that we can keep store inventory productive and still offer customers a very easy, prompt way to get the titles that may not be in the store, but are available to them via our e-commerce site. It’s a big part of our overall cross-channel strategy, which as it continues to evolve, is going to enrich the customer experience tremendously.

2. Returns on new adult hardcover books are running at an industry average of 40%.  That seems like an awful lot of waste.  What can we all do about it?

I think all of my comments above address this.

3. As you know, Amazon is selling e-book versions of newly published hard covers (for download onto their Kindle reader) for only $9.95.  Do you think that this will result in downward pressure on the pricing of hard covers?  Would Borders consider lowering the prices of the e-books it sells, possibly by combining e-book and hardcover sales in a bundle of some sort?

No, I don’t think this will push hardcover prices down.  I simply do not believe that most customers who are buying an e-book are making that decision based primarily on price. They have bought into the technology of the device and the e-book is just the format in which they are acquiring content. They have selected their preferred delivery method and that’s what it happens to cost to acquire new content.   Therefore, I don’t think we need to lower e-book prices or hardcover prices. I think we always need to make sure we offer a value to the customer that they perceive is a good one. Books represent a great value compared to lots of other forms of entertainment. The hours of enjoyment and enrichment people get from books per hour is so much less expensive than many other options.

As far as a bundle, that may make sense and is certainly an option we would consider…we are always looking at value and what our customers would find a value in…so if combining the two would be viewed as a better value than buying separately and there was a demand, that’s something to look at. All options are open for us.

4. Traditional forms of marketing such as paid advertising on television, radio and print are increasingly expensive for publishers and possibly less effective than other forms of marketing.  What other forms of marketing have you seen actually driving sales in your stores?

Borders is actually positioned extremely well here. We do very little if any traditional advertising, as we have a tremendously effective and cost effective marketing vehicle readily available to us in our 29 million member Borders Rewards loyalty program.  We are still growing membership in this program at over 130,000 a week and capturing emails along the way.  We market directly to these customers primarily through our weekly Borders Shortlist emails, which we know our customers love because they have a high open rate, a high sales ratio for titles featured and represent the real “heart” of our company—the editorial voice and respected brand we bring to books, music and movies that is so trusted by our customers universally.

Our Borders Media content is incredible as a marketing tool. We create exclusive high quality video programming in house—shows like Borders Live at 01, Borders Book Club and Borders Kitchen, among others—are highly watched and help us drive sales. Now that we have Borders.com, we can have a “buy button” right there with this content which further drives sales. We have hundreds of episodes archived and our customers truly love to engage with this content.  Frankly, we’ve been doing it longer and we do it better than anyone else, so it’s carved out a position for us with customers that cannot easily be unseated.

Speaking directly to an engaged population of customers is absolutely the way to go and we’re leading the way on it…the sky’s the limit!

5. Finally, what are you reading now? 

I just finished “The Monster of Florence”, by Douglas Preston and I’m now reading “The Snowball: Warren Buffett and the Business of Life”, by Alice Schroeder.

–Bob

The happy result of this meeting is that Carole will oversee the publication of HarperStudio’s list in the UK, Australia and New Zealand, for all of the titles in which we have acquired world English-language rights. Our authors will benefit from having one person we trust completely oversee the publication of their books abroad both by sharing our publishing vision (as opposed to landing at any one of a number of publishers,) but also by sharing the profits from all their English-language publications around the world.

And thanks to HarperCanada’s President and CEO David Kent’s support, we’ve got North America completely covered as well…

Bob

“It mostly involves putting “Britney Spears Sex Tape” in the headline and then using it in the first 15 words of the blog post. I mean really, beyond that, there isn’t that much in terms of tips ‘n’ tricks, as you can apply the Britney Spears Sex Tape principle to any topic!”

And here I was thinking the web was this democratic space where good content was rewarded with traffic! Palin Fey Sex Tape. But I guess I’m naïve not to realize that good content gets lost online just like great books often go unnoticed because they don’t make it to the front of the bookstore. In that sense word of mouth is just as important on and offline. Or, in this case, Palin, Fey, Sex Tape.

SEO advice welcome.

Julia

A piece of an answer to that question may lie in yesterday’s highly anticipated ruling by the Copyright Royalty Board to keep the rates for permanent digital downloads at 9.1 cents a track (the same as physical recordings) [NYT]

In one document submitted to the judges, an Apple executive threatened that a significant increase in royalty rates could force the company to shut down its iTunes music store, which has sold 5 billion songs since it opened five years ago but which operates with thin margins.

Should royalty rates for physical recordings and digital downloads be the same? And does this ruling shed any light on the ongoing debate amongst publishers about e-book royalty rates?

Julia

“Supporters had considerable discretion to use MyBO to organize on their own; the campaign did not micromanage but struck a balance between top-down control and anarchy. In short, Obama, the former Chicago community organizer, created the ultimate online political machine.”

[for full article including interview with 29 year-old CTO Jascha Franklin- Hodge, click here]

Can a platform like MyBO be built solely around reading? An authentic space where authors can communicate directly with their fans? Or does it make more sense for conversation about books to live within the context of a broader social network like Facebook? (And please don’t say Shelfari)

As an aside, whoever came up with this “Great Schlep” video is GENIUS:

The Great Schlep from The Great Schlep on Vimeo.
credit (chart above): MIT Technology Review

Julia

Five things I learned:

1. This group is wide open to experimentation.  They’ll do anything that might increase the size of the bookselling pie, given the number of forks going into it (to borrow a metaphor from our always-intellectually-curious moderator, Roxanne Coady of R. J. Julia Booksellers in Madison, Connecticut).  We agreed to talk further, for instance, about how booksellers can use print-on-demand to offer sample chapters or even free sneak previews of entire books, and how booksellers might offer e-book and/or audiobook downloads as low-cost or free-with-purchase bonuses with books bought in their stores.
2. They’re willing to try non-returnable, if the discount is deep enough, and we can re-supply them fast enough when a book takes off quickly.
3. They were mixed on the idea of having no list price on the book: some loved the freedom of choice it would give them…some thought it would create other problems.
4. They think that they should get some kind of compensation for the role they play in launching new authors in particular.  I don’t have an answer for that, but it’s a fair question.  Any suggestions?
5. Most of them think too many books are published…and all of them are mystified by how many books are published by the six big trade houses that aren’t properly supported by marketing or publicity.

I’m looking forward to continuing the conversation…

Bob

But now I think Twitter got a bad rap.

I’ve been seeing increasing media coverage about Twitter, not to mention that EVERYONE from the O’Reily conference was giving out their Twitter addresses along with email and phone numbers.

I’m an information junkie. I like to know the news, new technology, gossip, publishing deals, etc. – and I like to know it first and fast. Turns out Twitter is perfect for that.

Yes there are people on there who tweet inane details…..but I don’t have to follow them. There are also Twitterers whose info I want to hear: CNN, Steve Rubel, Tim O’Reilly, Obama, etc. etc. etc. I was so surprised to see that nearly every major company I looked up was Twittering — even a sister division of my own company, HarperTeen.

So I’m a new Twitter junkie, as my friends and colleagues will attest. I haven’t Twittered yet myself (well, once, to my daughter who was home sick and sending me tweets from her sick bed upstairs)…..

But stay tuned…..as soon as I can figure out something useful to say, I’ll be Twittering myself.

Debbie

Given that we’re planning extensive digital marketing campaigns for each of our books, we need a great website, right?

While we figure out the next step, we started this blog, www.26thstory.com …..for about $15 a month; It’s scrappy. It’s no frills…….but it does show videos and photos, and it takes questions and comments, and has living, breathing author pages such as these for Emeril and Joann Davis, and will have one for each author as we sign them up.

Which then leads me to ask: Why do we “need” a website? We’ve been looking at proposals for hundreds of thousands of dollars, and I am still not clear what we would accomplish with a website that justifies that amount of money.  I certainly understand the difference between their functions, just not the ROI.

Nearly everyone who’s opinion on the matter I highly regard says we need one. Certainly the companies we’ve looked into hiring say yes. And yet no one seems to be able to explain to me “WHY” in a way that makes sense to me.

So I’m asking YOU……what could we gain with a website that’s worth spending hundreds of thousands of dollars on?

Debbie

Me: Which aspects of the bailout – if any – are not being discussed in the mainstream media?

Bernasek: There are so few details that it’s clear there are many things still left to be discussed. What I find remarkable is that there has never been an adequate explanation for why Lehman was allowed to fail and other institutions were not that would enable investors and the public to be confident in the judgment of the officials involved.Then there are key questions that are have not been adequately addressed such as whether this action will be sufficient and what it’s true cost will be. More fundamentally, there is no articulated vision for an improved regulatory structure that would underpin the confidence of the public. Also, we need to know who is going to bare the losses? And who is going to gain from the new system?

Me: What will happen to the Hedge Funds?

Bernasek: This is a vital question. They may be the source of more problems than the banks. Maybe the other shoe to drop?

Me: Who will profit from this disaster?

May be more interesting to think through who will ultimately bear the financial losses. That question has not been answered.

Marcy Kaptur’s rant on the subject is truly worth watching:

Julia

Me: Do you agree with Krugman’s “Cash for Trash” op-ed this morning?

Bernasek: I agree with Krugman’s analysis and I think his ideas are good ones. But I doubt there is only one way to solve this problem. There’s enough uncertainty about Paulson’s plan that it’s difficult to critique.

Me: Could Goldman and Morgan potentially make a killing as a result of this meltdown?

Bernasek: Yes of course. This will present a historic opportunity for experienced financial dealmakers to profit.

Me: Does integrity factor in to this meltdown?

Bernasek: Integrity has everything to do with it. That’s the part that can’t be fixed with the stroke of a pen. And it’s the part we need to focus on. If we don’t, it won’t matter how many $700 billion bail outs there are, the rescue will fail.

Julia

Can’t Sleep? Neither can anyone who works at Morgan, Lehman, Merrill or AIG- or Goldman! Here are five books to curl up with during this unforgettable week:

“I continue to struggle, myself, with how valuable Twitter is as a viable marketing tool. 

I am skeptical myself that it becomes main stream in any way. Is it not simply the narcissist’s ultimate tool?”

I agree that no one really needs to know the banal details of daily life which are often the subject of Twitter feeds (though some people use Twitter to share actual news). But now that people have started to assume fictional identities on Twitter, like the characters on AMC’s Mad Men, (see BusinessWeek article), the space has become an unexpected platform for deep branding.   

Could authors and publishers benefit from this? (I’m thinking Stephenson, Rowling, Meyer, Lauren Conrad! Anything with a cult following, really.) Are hard core fans of certain writers likely to use Twitter to act out plot lines and would that have any impact whatsoever on sales?

Don Draper would say fans have to have a “sentimental bond” with the subject- like the carousel!   

Julia

Hence why more publishers have begun selling individual chapters online, something I think we’re going to see more and more of, (Stephen King was one of the first), and something I support – though not everyone does. Leon Neyfekh addresses the question of selling individual pieces in his recent post “In Age of Shortness, Why Shouldn’t Fiction be Sold by the Piece?”. Apparently Matt Weiland, the deputy editor of The Paris Review, is opposed to selling individual chapters of his forthcoming anthology State by State (co-edited with Sean Wilsey).

“I think one of the pleasures of doing this kind of work is that you’re making something larger than the sum of its parts…Part of the thing about being an editor and a publisher is … that you’re making selections, you’re curating. We do it because we think all the stuff we selected is really good and worth reading. To go with some a la carte model seems to sap some of the wonder and the curiosity and the strangeness of good publishing out of it.”

On the one hand, I absolutely agree that an editor’s job is to curate and, ideally, an anthology is greater than the sum of its parts, but why not give people the choice? I mean, “good publishing” is absolutely about “wonder and curiosity,” but isn’t it also about getting as many people as possible to read the content you have so thoughtfully hand picked? Wouldn’t selling individual essays online create an environment in which a relatively unknown author’s piece could go viral and reach an exponentially larger audience? (A phenomenon we see time and again with music singles).

I guess relying on the public in this fashion places the act of curation more squarely in the hands of the reader, not the editor/ publisher. And that can be a hard pill to swallow.

Julia

I went to the video store with my fifteen-year-old son yesterday, where we ran into the latest version of free samples. We’re already pretty excited about the debut of True Blood on HBO, since it was created by Alan Ball, whose Six Feet Under was a favorite in our house. And we were planning to watch its debut on September 7. But why wait? There on the shelves of our local Blockbuster was Episode One–ahead of the broadcast! And not only that, when we went to rent it we were told it was free of charge this week.

The old ideas about broadcast “windows” are clearly falling fast. In a recent article about an upcoming collaboration between David Byrne and Brian Eno, they announced their plan to offer the album as a digital download before making it available as a disc. In another interesting move, the Obama campaign had the New York Times print his Democratic National Convention speech on their website about 15 hours before he spoke live.

Book publishers are beginning to experiment with new approaches as well–and why not? If giving a book away for free–or at least a portion of it–helps interest readers in a book, then we’ve achieved an increasingly difficult goal. Must a paperback always follow a hardcover by a year? Must an electronic book be released at the same time as the hardcover? We need to find ways to avoid pitting one retailer against another while at the same time keeping our eyes on the prize: getting people to hear about the books we publish, and possibly even read one–in some form or another, sometime!

Bob

Was Obama on Military Time?

As we discuss our plans to announce HarperStudio’s first list of books, I’ve been thinking a lot about the role of the traditional press release, and whether or not it will go the way of the milkman or the cassette tape.

Ten years ago, when a company had news to share, (and when media cycles were a lot longer), a publicist would send a carefully crafted document to a short list of newspapers and trade publications, and call it a day. But the rules of the publicity game have changed – nowadays the means by which a high profile figure chooses to share news is often news itself. On the political front, I wasn’t at all surprised to hear Barack Obama is using SMS text messaging to share up-to-the-moment campaign information since he has the likes of Chris Hughes working for him. But to learn that Angelina Jolie & Brad Pitt no longer use a full time publicist?!? This I could not believe.

Is disintermediation the new black? Do people want information directly from the horse’s mouth?

And, if so, maybe HarperStudio should forgo the traditional press release and simply share information about our books online in real time with anyone who cares to read it. Why add another layer? I mean, if you were trying to sell someone your home, would you invite them in for a personal tour, or would you allow a stranger to snap low res photos to pass along?

Depends on the house, I guess.I’m not quite sure who will show up to HarperStudio’s virtual open house in a few weeks when we go live, but our doors are most definitely wide open.

Julia

In fact, it’s that lack of knowledge that lead me to the start-up of HarperStudio, which I see as a chance to experiment with new approaches and see what works–and what doesn’t. That’s why this needed to be a start-up, separated from other existing imprints (the five of us are even sitting on the 26th floor at HarperCollins, with nothing else here except our copier machine): so that there is a firewall between us and other, ongoing book divisions.

The problems of the business are pretty clear: skyrocketing advances that only rarely earn out in sales; overly aggressive distributions that try to justify those advances but often result in massive returns; overspending on ineffective marketing to help move those overdistributed books; downward pressure on pricing from new digital formats; etc…There are plenty of success stories in the midst of these trends; the biggest hits continue to get bigger, so if you are the publisher of Stephanie Meyer, or The Secret, or The Last Lecture–or if you are Jonathan Karp–you might not feel the pain. But for every Da Vinci Code  there is a Gargoyle, and even the gamblers with a hot hand eventually crap out at the tables. The more trade publishing looks like Vegas, the more the "house" wins–but the house in this case isn’t a publishing house, and while authors on whom the biggest bets are made seem like winners today, ultimately the health of the industry is at stake, and there won’t be anyone at the tables in a few years if we don’t find new ways to succeed.

So we are offering fifty percent of the profits to authors who are willing to forgo six or seven-figure advances, offering higher discounts to booksellers willing to limit returns, putting all of our marketing efforts online, and trying out new combinations of formats–however "disruptive" those combinations may seem. Because while we have no more idea of what publishing will be than anyone else does, we’re willing to risk some embarrassment to find out.

Bob

Who in their right mind would want to do that, you might wonder? Especially during a time of such great tumult in the publishing industry. The truth is, those of us who examine the excel spreadsheets at the end of every fiscal year see what is on the horizon for book publishers; we’re hanging on a cliff.

But rather than gaze down over the edge of that cliff, and worry about the future of the publishing industry, I decided to look up. I wanted to see if a publishing company could be profitable without playing the high-stakes game of the book auction (a game in which I heartily participated); I paid more for The Last Lecture than any other book I’d ever bought. I wanted to offer authors an equal share of the profits if they were willing to forgo that game as well. I wanted to experiment with online marketing, and find a way to use the internet to enrich people’s reading experience, not impede it.

I wanted blue sky.

And while I was at it, why not try to eliminate returns? I was always amazed that we were in a business that found it acceptable to waste forty percent of what we produced.

So I am asking booksellers to buy books on a non-returnable basis in an exchange for a higher share of the revenue.

Now the challenge lies before us at HarperStudio: to bring a fresh set of eyes and ideas to the publishing process; to find new ways to connect with readers, and discover new ones; to embrace technology and create communities with others who believe books are a vital part of our culture.

What lies ahead is uncertain. I hope you’ll join us in this experiment and share your thoughts and ideas about the future of book publishing. I hope you will join us in looking up. Look up to the 26th Story and come visit.

Bob