Seldom a week goes by without an announcement that a literary agency has launched an e-book venture. The schemes vary from agency to agency but in essence these firms have undertaken to publish or distribute e-book editions of their clients’ original works and reprints.

This development has created some tensions among their clients and unease in the author community in general.  How should authors regard it?

Seller vs. Buyer

The traditional role of literary agents is that of advocates for the authors they represent. Their clients are the sellers engaged in arms length – and sometimes adversarial – relationships with publishers – the buyers.  Agents have a legal, ethical, and fiduciary obligation to promote, protect and manage their clients’ interests, and authors rely on their agents’ unalloyed partisanship.

At least that is the theory. In actuality agents’ allegiance is rarely unalloyed, and they often find it strained or even conflicted. Friendships with editors, for instance, may compromise an agent’s impartiality. Or an agent may have to favor one client over another when awarding a coveted project.

These tensions are unavoidable, and though they may occasionally tax an agent’s relationship with an author they are rarely so flagrant as to violate the Association of Authors’ Representatives’ Canon of Ethics, whose first principle states: “The members pledge themselves to loyal service to their clients’ business and artistic needs, and will allow no conflicts of interest that would interfere with such service.”

It was owing to this injunction – which I helped to forge as a member and then president of the AAR – that I felt it best to leave the organization ten years ago when I founded E-Reads, the e-book publishing company that hosts this essay. I ask you to keep that fact in mind as you read these observations, and to discount them to whatever degree you may judge appropriate.

The AAR’s stern precept prevailed until the arrival of the digital age. As in so many other fields of endeavor, the digitization of books has had a profoundly destabilizing effect on relationships that had remained fixed for more than a century. The new technology has disintermediated all agencies – not just literary – that once stood staunchly between sellers and buyers. Now authors can – and increasingly do – sell to publishers without the intervention of an agent.

Squeezed out of their customary role, literary agents have been forced to reinvent themselves and seek new ways to be relevant to authors – and make a living at it. As I mentioned in a recent series of articles, many have developed management services such as creation of websites for clients, assistance with social networking, and marketing and public relations. (See Middlemen in Search of a Middle Part 1, Part 2)

These offices sit well within the ethical boundary defined by the AAR, the principal guild for literary agencies in the United States.

Assuming the role of publisher, however, pushes agents much closer to that boundary. And some authors believe the line has been crossed. For that reason the AAR recently reaffirmed, in no uncertain terms, its commitment to the fundamental principle that in all cases, member agents “may receive compensation only from the client for the member’s services; the member may not separately engage in any business from which the member receives separate profit/compensation with respect to the exploitation of the client’s work in any medium, including e-publication.”

Where’s the Conflict?

The obvious source of conflict is that an agent’s advocacy for the author may be tinged if not tainted by the agent’s self-interest as a buyer.  In determining the disposition of a client’s property, the agent must now promote his own publishing company as a valid candidate for publication. Is the agent’s e-book company better than Random House, HarperCollins or Simon & Schuster?  It may actually be, but the agent has disqualified himself from objectively advising his client one way or another. This puts the author in a quandary: whom can he or she now turn to for an unbiased evaluation?

Obviously the answer depends on the agent’s integrity. But it stands to reason that authors in that position should be offered the opportunity to engage a disinterested third party – a lawyer or another agent or the Authors Guild – to objectively evaluate his or her options.

As we said previously, as the publishing industry rebuilds itself from the ground up, every denizen of the ecosystem must not just adapt but reconstitute. Agents are no exception, and it is entirely possible that a decade from now their role will have only the faintest resemblance to that of hustling for commissions today.

Richard Curtis

“If I were a betting man,” writes John Biggs in techcrunch.com, “I’d wager quite a bit” that books “are not going to make it past this decade.”

Good thing you’re not a betting man, Mr. Biggs, because I have $1000 on the table that says you’re wrong. Game on?

Biggs’ confidence is based on current hot trends in e-book sales, and we can’t blame him for projecting the doom of paper, publishers and bookstores based on those soaring charts.  Here’s his reasoning:

As we well know, ebook sales are now outpacing hardback sales and publishers are now crowing ebook numbers alongside their traditional in-store sales numbers. Soon those in-store sales numbers will dwindle and disappear simply because there will be no stores – heavy readers, the folks who buy genre fiction by the basket-full will be happy to head over to Nooks and Kindles, especially when they drop below $99 (as they will this year).

As a literary agent and e-book publisher I foresee a different picture, one that points to a continuing attachment to paper books, the publishers that produce them and the shops that sell them. Some of the evidence is statistical, some anecdotal and some gut instinct, but more than sufficient to challenge Biggs’ timeline that has independent bookstores gone by 2015 and major publishers by 2019.

“I will miss ,” says Biggs, “the creak of the Village Bookshop’s old church floor, the calm of Crescent City books, and the crankiness of the Provincetown Bookshop.”

He’ll also miss $1000.00.  Make your check payable to Doctors Without Borders, Mr. Biggs.

See if you agree with Biggs’ timetable: The Future Of Books: A Dystopian Timeline

Richard Curtis

In nature big fish eat little fish, but in business the opposite is often true: the small destroy the large.  Small, nimble, clever, aggressive startups with nothing to lose are able to undermine staid, clumsy behemoths burdened by overhead, bureaucracy and legacies.

Hmm. Are we thinking of any small, nimble industry in particular? Of any staid, clumsy behemoth industry in particular?

Clayton Christensen is a student of the rise and fall of big companies, and he’s coined a wonderful phrase to describe the cycle: Disruptive Innovation. He describes it as “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors.”

In the space of a decade we have seen the digital book industry (that is the small industry you were thinking of, isn’t it?) soar from novelty to dominance, absorbing in the process a far larger publishing business like a snake unhinging its jaw to consume a sheep.

But there’s a corollary to the rule of disruptive innovation, for, after battening on its huge prey, the smaller company itself becomes fat and soft and susceptible to the predations of the next generation of hungry young businesses.

A recent New York Times editorial, Remember Microsoft?, exemplifies the concept. “Technology upends companies in different ways,” itl stated. “It allows new firms to deliver better products and services in a more efficient way; it also creates new goods and services for consumers to want. Eastman Kodak, the fifth-biggest company in the S.& P. 500 in 1975, was almost destroyed by digital cameras and is no longer in the index. General Motors, fifth biggest in 1985, was hobbled by rivals that could make more fuel efficient cars. Microsoft still rules the PC desktop. But that will matter less and less as users migrate to tablets and more computing takes place in ‘the cloud.’”

Which brings us back to e-books. It’s hard to imagine that they may simply be a bridge to a far larger media world, but if Christensen’s theory holds up, a day may come when the hegemony of giants like Google, Amazon and Apple becomes vulnerable to a fast-moving aggressor, and the cycle begins all over again. Don’t believe it? Just yesterday we wrote about powerful new programs like ePub3 and HTML5 that will make e-books look positively Gutenbergian.  Let’s hope we’re all around to see the day.  Or maybe some of us would rather not.

Read Disruptive Innovation and watch the video.

Richard Curtis

Many people don’t realize it but the phrase “push the envelope” was created by test pilots. The “envelope” was the stratosphere and “pushing” it was a colorful phrase for testing the altitude limits of their aircraft.  The phrase has been broached recently in connection with another rocket ride, the explosive growth of the e-book industry. As it approaches the $1 billion threshold – roars up to it is a better phrase – the issue of when it will crash and burn or even just slow down has been raised.  But a study by Forrester Research, the respected consumer study firm, reassures us that there’s plenty of fuel in this rocket and we have a long, long flight ahead of us before the envelope starts pushing back.

Speculation began last March (See Can E-Book Sales Bubble Burst?) “The next year,” said futurist Mike Shatzkin, “will see a continuation of robust retail growth” which he puts “conservatively” at 3.5%. That means that “the e-book minimum expectation by next Christmas would be between 15 and 20 percent of the sales of a new title… And then it can’t really continue the same growth rate the following year because that would take us to a great majority of books read being e-books. And I don’t think you’ll find anybody expecting 60% or more e-book penetration in two years.” The saturation point? “It won’t start slowing down until e-book sales are 20-25% of what a publisher expects on a new title.”

Shatzkin concluded that the topping-out moment would occur at the end of 2012.

Forrester’s just-published five year e-book report is more expansive. Indeed, its authors assert that digital books will become the default for publishing. “The punchline,” writes analyst James McQuivey, “is this: 2010 will end with $966 million in e-books sold to consumers. By 2015, the industry will have nearly tripled to almost $3 billion, a point at which the industry will be forever altered.”

The key to Forrester’s optimism is the untapped potential of the e-book buyer, who currently represents only 7% of the book consumer pool. “Did you know that the two most common ways people get books today,” McQuivey informs us, “is borrowing them from a friend or getting them from the library? ” The 7% who read e-books “happen to be a very attractive bunch: they read the most books and spend the most money on books. And here’s the kicker – the average e-book reader already consumes 41% of books in digital form. Oh, and that includes the people who don’t have an e-reader yet, which is nearly half of them. For those that have a Kindle or other e-reader, they read 66% of their books digitally.”

“And that,” he concludes, “is why we pause to commemorate the crossing of the billion-dollar threshold, because from here things will move so quickly that by the time the dust settles, the book business may actually be the most digital of all media industries, even if it got the latest start.”

Read Why The Book Business May Soon Be The Most Digital Of All Media Industries and you may conclude it’s time to recalibrate your projections in the direction of a comfortably distant envelope.

Richard Curtis

The Association of American Publishers in conjunction with the International Digital Publishing Forum have released trade e-book sales for August 2010 and we’re happy to report that after that June dip – dipette, really – the numbers continue their nearly triple digit flight upward. Sales were $39,000,000 for August, a 273% increase over August 2009 ($14,300,000) and the second biggest month in e-book history – the first being July 2010, the previous month.

As we said when we reported July, if there was ever a tremor of doubt (See June E-Sales Soften – If You Call Double “Soft”) it has been well and truly erased by resumption of two record-breaking months. The above chart reflects the brief softening (due to customer resistance to higher e-book prices) in Q2 but we expect to see a spike when Q3 sales are tallied next month.

Meanwhile…

IDPF reminds us that:

* This data represents United States revenues only
* This data represents only trade e-book sales via wholesale channels.  Retail numbers may be as much as double the above figures due to  industry wholesale discounts.
* This data represents only data submitted from approx. 12 to 15 trade publishers
* This data does not include library, educational or professional electronic sales
* The numbers reflect the wholesale revenues of publishers
* The definition used for reporting electronic book sales is “All books  delivered electronically over the Internet or to hand-held reading  devices”

RC

E-book sales statistics for May 2010 have been released by the Association of American Publishers (AAP) in conjunction with the International Digital Publishing Forum and there’s been yet another might leap: trade eBook sales were $29,300,000 for May, a 260% increase over May 2009 ($11,200,000).

We’ve become so spoiled by triple and quadruple sales growth that when the jump is “only” 260% we begin to fret that sales are starting to flatten.  But our statisticians remind us that the real numbers may be as much as double the above figures due to industry wholesale discounts. Even if they aren’t, every business should all be so lucky to experience “flat” business growth of 260%!

As always, we’re reminded by AAP and IDPF that…

• The data above represent United States revenues only
• The data above represent only trade eBook sales via wholesale channels.
  
• The data above represent only data submitted from approx. 12 to 15 trade publishers
• The data does not include library, educational or professional electronic sales
• The numbers reflect the wholesale revenues of publishers
• The definition used for reporting electronic book sales is “All books delivered electronically over the Internet OR to hand-held reading devices”
• The IDPF and AAP began collecting data together starting in Q1 2006

Richard Curtis

Last February we wrote up a self-confessed book pirate who called himself “The Real Caterpillar” and spoke with complete candor about his rationale. The article not only provoked a string of intensely emotional comments but flushed another pirate, “Jap”, who provided such a stout defense of his activities that some of our commentators grudgingly acknowledged the seductive truth of what he had to say.

The other day a reader whose handle is “Ambivalent” came across that posting and was stirred to write his or her thoughts in a long comment, the essence of which is that under certain circumstances even an upright citizen and passionate patron of books and bookstores is not above downloading a book file from a pirate website. We’re printing it in full because I doubt if you will find a more candid or cogent statement on the subject. “Ambivalent” is aptly named: as you will see, his/her subterfuges are not unattended by remorse.

The issues raised by “Real Caterpillar”, “Jap” and “Ambivalent” represent the struggles of book lovers to find their place in a moral environment that is shifting as rapidly as the underlying technology. Those issues burst into flames again just recently when an article by a New York Times columnist condoning piracy under certain conditions set off another storm of controversy (see NY Times Ethicist Condones Ripping Off E-Books). Just when we were working up a head of righteous steam, a notable author, John Scalzi, came out in support of the ethicist’s position! So now we’re good and bewildered.

If you haven’t made up your mind you might want to read these postings in one sitting and juxtapose the pros and cons.  You might find yourself guiltily nodding in agreement with someone you were prepared to despise just half an hour ago.

RC

*****************************

“Ambivalent” wrote

Hi. I found this discussion (We Have Met the Enemy and He is The Real Caterpillar) rather interesting. I buy a lot of books, both print and as ebooks.

I attempt to only buy ebooks without DRM and not for a specific platform, because I think that the trend to make specific ebook readers which use a propitiatory [proprietary?] format is both foolish and dangerous. It is foolish in the sense that Jay referred to above because some people have an urge to prove encryption is breakable- and any encryption is a challenge. This encourages people to take the challenge. It is also foolish because I know writers who have had ebooks made of their titles, and the company has gone out of business- and the ebooks are not available, but their ebook rights are up in the air. The people who bought those ebooks have no support for any problems they have reading them on that reader.

It is dangerous because it allows the owners of the proprietary format to use that as a tool to gain power- as is seen in the recent disturbing antics with Amazon.com. It allows for a disturbing amount of censorship, if you have the only reader that can read certain books, and you can remove books people have bought. The fact that Apple and Amazon are flexing their ebook ‘muscles’ is more than obnoxious. It seems to me that it can ever so easily become a monopoly on distribution. It is also a flagrant disregard of the rights of people and publishers to set their own prices.

Now to the ambivalent portion. I have downloaded books that I did not pay for. Some of these came from Baen and Tor, and Cory Doctorow, and various sites that occasionally put up free ebooks. I read Cory Doctorow’s Little Brother as a free ebook, and decided that I wanted to have it in hardcover, when I usually wait for paperback, and that I wanted to send a copy to a friend as a hardcover too.

However, I have also downloaded books that were not from sites giving them out legally. My gray position is that I download books I already own – and want to be able to read in ebook form – on a net book currently – for portability. This seems the equivalent of ripping a CD to an Mp3 file and playing it on my computer. I realize that publishers would rather I buy books in every different format to use. But I did buy that book originally, doing my part in giving money to the writer and paying the publisher for their services. Ethically, I think this is gray.

What is not gray is when I have downloaded a book I did not purchase, and read it. I don’t do this a lot, but I have done it. I will read a book by an author I am not familiar with, to find out if I like their writing.

There are several people whose books I read in pirated ebook form for the first time and then went out and purchased print copies of every one of their books I could find. This includes buying OP copies from used book dealers- which is also a practice that does not give money to publishers or writers a second time.

There are writers whose books I stopped reading after a few pages, and deleted the books, because I knew I was not interested. While an act of piracy, because I downloaded the book, this is no different in results than browsing the shelves of a print book store and then not buying the book because it did not interest me. Now that more print book buying is done over the Internet, it is often impossible to browse a book before the commitment to buy it. The page or two sometimes available online at sites like Amazon is not adequate, unless the book is really awful- and even then I can not page to the center and see if the writing has improved or a plot has appeared. If publishers would post a chapter or selections from every book on their entire list on their website, I would haunt the sites. It also might sell a great many more mid list books, just because people could become aware of them, which would benefit everyone. Until then, browsing writers’ works in a download to find people I have never read before is sometimes only possible in a pirate download.

I have also downloaded a book which has still technically been in copyright, because there was no available copy to buy, as the book had gone out of print. Again, this is something that happens to many many mid list books, and having ebook copies available to buy- for a reasonable price (another issue entirely) might bring many more sales for the book, instead of it disappearing into oblivion.

Where I feel guilty is when I download a copy of a book that was recently released, because I cannot afford to buy it in hardcover, and don’t want to wait for a paperback edition. Since I have not already purchased it, even though I intend to, it is a true act of piracy- and I do try to restrain myself. Publishers like Baen Books, who sell their new releases for the month whether they are hardcover or paper, for a flat fee in ebook form, mean I do not have to resort to that. Their bundle for the month for a webscription is $15- the price or less for two paperbacks, and I can legally feed my habit.

While there are always going to be people who pirate things for the sake of getting something they did not have to pay for, I think there are many more people like me- who would happily purchase ebooks at reasonable prices, and only resort to other behaviors when this is not possible.

Publishing is in a state of flux. Making sensible decisions about ebooks, and taking advantage of their flexibility is a step that publishers need to take. The hard work was creating a book for sale as a print copy. Pirated books are often as good quality as any print or ebook copy available, with some uploaders adding in pictures from the text. Even books no longer in print- the mid list- still are available as a hard copy somewhere- even if only on the writer’s bookshelf. Scanning it into ebook format is simple enough for high school students. It could put a lot more money into the pocket of writers and publishers to make those books available in non-pirated format, and it would not be filling warehouses, or messing up royalty statements and accounting with returned covers.

I think that many people – me included – would rather pay a reasonable fee for a previously unavailable older book than look for a bootleg copy.

February 2010 e-book sales stats just released by the International Digital Publishing Forum and Association of American Publishers have shattered prior records by a breathtaking margin.  Sales were $28,900,000, exceeding  the prior February ($6,600,000) by nearly 4.5 times.  The first two months of Q1 2010 were $60,800,000.  By comparison, ALL THREE months of  Q4 2009 (the highest quarter to date) were $55,900,000.

IDPF reminds us that:

* This data represents United States revenues only
* This data represents only trade e-book sales via wholesale channels. Retail numbers may be as much as double the above figures due to industry wholesale discounts.
* This data represents only data submitted from approx. 12 to 15 trade publishers
* This data does not include library, educational or professional electronic sales
* The numbers reflect the wholesale revenues of publishers
* The definition used for reporting electronic book sales is “All books delivered electronically over the Internet or to hand-held reading devices”

The graph at at the top of the page shows sales through ‘09 but do not reflect January/February 2010.

Will the party ever end?  Read Can E-Book Sales Bubble Burst?

Richard Curtis

Barnes & Noble to Test Bundling e-Books, p-Books, reports Jim Milliot in Publishers Weekly.
“Barnes & Noble will begin testing the sale of bundled print books and e-books in the next 60 to 90 days.”

That means that if you buy a print edition at a B&N store you’ll be able to add the e-book at a discount. “Providing e-books and print book bundles is just one way B&N hopes to use its retail footprint to increase sales of e-books while maintaining its lead position as the nation’s largest bookseller,” says B&N.Com president William Lynch.

Bundling has long been a dream of digital technologists hoping to satisfy the needs both of print and e-book readers and offers a rare exception to the proverb that you can’t have your cake and eat it too. B&N’s plan may kick off yet another round of pricing debate when pundits and consumers question whether the e-book shouldn’t simply be thrown into the bag free with purchase of the printed book. In any event, bundling gives B&N an advantage over some retailers that are not in a position to sell a print book and an e-book in a single transaction.  Amazon’s response to B&N’s gambit will be interesting to see.

Lynch also discussed adding print on demand to B&N’s roster of core services, and hinted that it might even buy into a POD company. More likely, for the near future, B&N might experiment with installing Espresso POD machines on the premises of certain stores.

Pictured here is a bundling bed. According to Wikipedia, “bundling, or tarrying, was the traditional practice of wrapping one person in a bed accompanied by another, usually as a part of courting behavior. The tradition is thought to have originated either in the Netherlands or in the British Isles and later became common in Colonial America, especially in Pennsylvania Dutch Country. When used for courtship, the aim was to allow intimacy without sexual intercourse.”

Sounds like the perfect metaphor for joining book and Nook.

Richard Curtis

Are you as weary as we are of doomsayers sounding the death knell of print books? The latest comes via a blog on Huffington Post by Dan Agin, editor in chief of the online journal ScienceWeek. You would think that with a Ph.D. in biological psychology and three decades of lab research experience in neurobiology, Agin would be smarter than to make categorical statements like “Requiescant in pace, big print publishing.The run is finished.” Aside from his solecism (it’s Requiescat), he has buried print books and declared Game Over.

Agin has made the mistake that so many other Print-is-Deaders have done, condemning the medium when what we really hate is the system that supports it. We’ve said it many times but it bears reiteration: there is nothing wrong with printed books – just that the way they are distributed, which is appallingly stupid and wasteful. But does that mean print is finished? Not even close. However, Agin is entitled to his opinion and goodness knows there are a lot of people who share it.

What surprises us, though, is how willing this credentialed neurobiologist is to exalt Kindle and other e-readers when there is an impressive body of scientific evidence suggesting that reading on a screen may not be all that it’s cracked up to be. Some researchers have suggested that readers – especially young ones – are easily distracted by e-books, fail to immerse themselves the way they do in print, and do not retain information as well as they do with words on paper. In a posting last fall called The Medium is the Screen. The Message is Distraction, we quoted Sandra Aamodt, former editor in chief of Nature Neuroscience: “People read more slowly on screen, by as much as 20-30 percent… Distractions abound online — costing time and interfering with the concentration needed to think about what you read.”

And Maryanne Wolf, a professor of child development at Tufts and author of Proust and the Squid: The Story and Science of the Reading Brain, points out that “No one really knows the ultimate effects of an immersion in a digital medium on the young developing brain.” But “my greatest concern is that the young brain will never have the time (in milliseconds or in hours or in years) to learn to go deeper into the text after the first decoding, but rather will be pulled by the medium to ever more distracting information, sidebars, and now, perhaps, videos (in the new vooks).”

Read Agin’s article, Kindle Armageddon: How the Publishing Industry Is Slitting Its Own Throat, and form your own opinion.

Richard Curtis