Here it is, April Fools’ Day 2010 – a day that will go down in eBook history. Today is the day that five of the top NYC publishers (Hachette, HarperCollins, Macmillan, Penguin and S&S) change their eBook terms of sale, for better and for worse. Here’s our quick take on all the ongoing madness:
HOW DOES THE AGENCY MODEL AFFECT THE DIESEL eBOOKSTORE AND WHY?
1) Diesel doesn’t cater to that NYT-reading crowd. We ain’t that classy.
Oddly enough, the agency model *might* potentially have a very positive benefit for Diesel – mostly because, lately, our sales have been shifting towards the Indies. And let’s face it, folks, our fastest growing publishers are the more resourceful and innovative among them. Plus the Indies (bless their cotton socks) tend to be more receptive to current customer demand and taste.
2) Diesel is not supported by multi-billion dollar corporations and thus can’t sell a lot of the big name titles at $9.95.
Tons of folk outside publishing don’t understand nor care (and why should they?) about how the traditional publishing terms of sale work between a publisher and a digital retailer. Take Dan Brown’s THE LOST SYMBOL, which sells for $29.95, as an example. It is common knowledge within the industry that RH’s TOS (terms of sale) translate to 52% of the digital list price (retail price). Therefore, every time a retailer sells a copy of that title, they owe RH $15.57. Many among our multi-billion dollar competition have been selling that title for $9.95, eating “customer acquisition” costs of $5.62 per title, as a result. Multiply that by the 1000s of copies sold of however many NYT bestsellers there are, and that could easily add up to 100s of $1000s per month, per retailer. As an independent, the Diesel eBook Store simply does not have the capital to keep up with our mega competitors on such a grand scale. We would literally be out of business in less than a few months. Under the agency model, the playing field would definitely be leveled so that we can compete against stores with a lot more resource$. Practically overnight, the quality and personal rapport that’s inherent in the eBookstore experience becomes all the more important.
WHY NOT RANDOM HOUSE?
There has been a lot of discussion about why RH decided not to join the ranks of the Agency Five. We have two theories.
1) Why rush into a potential “golden handcuff” deal, like the one the music industry fell into with Apple in the early 2000s? Just for the mere benefit of saying, “Our eBooks were at Apple first!”? Throughout the long and mundane board meetings we’ve endured during our lengthy eBook careers, more caveats than we care to remember have been muttered in reference to “the sins of the music industry” – about how book publishing needs to avoid those same mistakes, at all costs. But, whenever we asked “What exactly, pray tell, are these so called sins”, no one seemed to know. (BTW, Kirk Biglione has a great PowerPoint about this. Check it out here.)
Are the Agency Five secretly sizing up their own golden handcuffs and throwing away the key? Only time will tell. Will RH look back up on April fool’s Day 2010 in retrospect and feel a little bit of pride, and perhaps even some glee, about their initial hesitation and reluctance? The jury’s not in . . . just yet.
2) Kelley used to work at “The Big House” and can personally say that “things don’t happen that fast” over there. As with any mammoth enterprise, it tends to be a little slow on the draw. Bottom line, RH has always been a methodical and cautious house.
WHO ARE THE LOSERS IN THIS DEBACLE?
1) CUSTOMERS, first and foremost. Literally overnight, thousands of titles will become unavailable to eBook lovers around the world – all because five publishers want to be on the Apple iPad when it first launches (and also to some large part, to tick off Amazon). We have been reading a lot of posts on the various blogs and message boards, and man, there are a lot of PISSED OFF folks out there who are blaming the publishers for their lack of concern. Also, many of our competitors have or will shut down their loyalty and rewards programs. They’ll also discontinue their use of coupons. Another slap in the customer’s face. On top of it all, one of the favorite customer practices – Bundling – will be severely limited. (Take note that, at the moment, Diesel has no plans to discontinue its loyalty or coupon programs.)
2) eBook Retailers – With only 30% of the pie, there’s not a lot of room left over for retailers, especially if they work with third parties like Ingram or Overdrive. This could potentially kill off a lot of healthy competition, outright. But then again, as the old industry jokes goes, “How does one make a small fortune in publishing? Why, you start out with a large one!”
3) Authors — We could write a thesis on this one. Most authors earn between 25% and 15% of DLP per eBook sold. Not sure if these terms will be renegotiated, but in our limited math skills, there’s less for the author under the agency model.
So there you have it. That’s our take on Agency. Don’t ever think we’re reluctant to ruffle a few eFeathers, if that’s what we have to do to get the facts out there.
Stay tuned for more digital diatribes but, right now, we gotta split. We have a business to run.
{ 13 comments… read them below or add one }
If I have read this correctly there will be lots of books that will no longer be available in ebook format… There are certain authors and titles that I can’t get hold of in ebook format because I don’t live in the United States or its territories…. That sucks in itself… Discovering the ebook format was a god send to me for simple fact is I love to read…and there is only so much room in my house…
I do have one question however… Book Piracy is a hugh problem as it is with as many as a hundred thousand downloads a day on any one book…. if people can’t get hold of certain titles legally, they will do it illegally….and by making these books unavailable in ebook format that’s what going to happen…. So my question for these big wigs is can they afford that kind of loss?
Hello Debbie, Thank you for the response. Unfortunately, it seems that most of the big NYC publishers are *really* starting to crack down on territory rights. In an ideal world, one would simply assume due to the inherit nature of eBooks, that all eBooks would have world rights but that would just make too much sense, right? However, we got some good news for you.
As Diesel is investigating the rights issue, by our own rough estimate, over 80% of our titles have world rights. Also our more progressive and popular indie presses, in most cases, all have world rights for their titles. *major sigh of relief*
As for piracy, I will argue the point that piracy is a direct collective result when high corporate mucky-mucks don’t legally give their customers content they really want. In today’s empowered age of the internet, if your customers want something, you better give it to them or they will stop at nothing to obtain it despite the legal implications (or lack thereof). So, your point is well taken here at Diesel. But then again, you are in fact singing to the chorus.
Interesting point point you make ‘legal implications (or lack therefore)’ in relation to piracy when considering that territorial restrictions have no legal basis in the first place. Individual consumers are exempt from parallel import restrictions. The purchase of ebooks by individuals is NOT a breech of copyright in any legal or even moral sense. Moreover the enforcement of territorial restrictions has an overwhelmingly disproportionate impact on people with disability creating a discriminatory outcome which under the ADA or DDA is illegal and immoral to block access to material that is readily available to other consumers.
That is very interesting since I just bought an ebook from diesel. And just after I payed for it but just before I could download it a message came up saying the country I was in(Belgium) did not have territorial rights for this book.
Therefore I could pay for it but not read it.
It seems hypocritical for the agency to criticise this copyright enforcement procedure, blame publishers for their “lack of concern for the customer” and yet still manage to rip me, the customer, of my money through this new industry law.
I guess we shall see if Diesel ebookstore is as concerned for the customers’ “justice” as they claim to be.
Note:If you intend to apply this procedure could you make sure to inform the potentiel buyer _Before he spends his money_ that the book is not available in his country.
After having bought a book from Diesel ebook-store but being unable to download it due to these territorial restrictions I was promptly reimbursed and apologised to.
In less than two days all was once more right with my previously spotless perception of the company.
Top classy work from the ebookstore while dealing with the changes imposed by these new procedures.
I bought an ebook from Simon and Schuster directly and was unable to do anything with it except read it with Adobe Digital Editions. I could not download it to my ebook reader (cool-er reader). It gave me an error about not having permissions. I contacted S&S and was told that they know it’s a problem and sorry. They refunded my money but that doesn’t help me to read to book. Then I came here for the same book and found it but it’s one of the ones which was pulled. I”m thinking that this whole thing is the reason I couldn’t download it. It looks like the world rights issue is what is keeping me from getting the book onto my reader. So all this is because these nit-wits wanted to get in bed with Apple? While I like Apple’s products, I never want to hear from anyone about Microsoft’s business practices again with the way Apple like to hold people hostage.
I tried to buy a ebook by one of my favorite authors to be told because I do not live in the United States or her terrtories I am unable to purchase said book…Not happy so went staight to the Author to express my feelings on this….The Author in question replied with an apology and asked where I usually purchase my ebooks from and after some research found a UK based service…. which I thought was nice….Unfortunatly they charge over £2 more for an ebook than if I were to buy it in paperback and they don’t have all the titles i’m looking for….. But as the saying goes Beggers can’t be choosers….Come on give us readers a break……………
Hello Debbie, Sorry to hear about that. We strive to please our customers however we legally are required to sell the publishers’ titles within the territory boundaries that they set for each title. The good news is that over 80% of titles at our eBookstore have worldwide rights. Not sure if you saw this but we just posted an insightful blog about the issue recently: http://blog.diesel-ebooks.com/?p=184
This is just another big business trying to protect an outdated business model. Rather than view the internet and the digital age as a opportunity to improve market penetration and circulation, they all view it as a threat and think of it as a way to provide more control. They need to get with program, the world has changed, the boarders have been removed, the internet brings us together and makes us one. No longer can they maximise profits by unfairly controlling the markets and Sh!ting on those that support them.
The answer is simple, just as it is for the music/movie industry;
1. Make it ready available so its easy to get,
2. Allow us to use it however we want, and
3. Price it fairly.
Stop trying to control us, and how we can use your content and start selling us what WE want with the freedom to use it how WE want.
Until you wake up and embrace the future, rather than running scared from it, cowering in your crystal castle, clutching at straws, and ranting mine! mine! mine!, your days are numbered. All this posturing is just the death throes of a dying industry and we cant wait until the next generation’s business models come along. Its not an IF its a WHEN, until then, we raise the finger of defiance; C’est li vie
Diesel, please pass these comments on and I look forward future transactions once the deadwood has been cut out.
The bottom line for me is that I would prefer to legally buy a book and read it with a clear conscious.
The more I am not allowed to legally purchase a book at a reasonable price, the more effort will go into pirating it.
If this model of “control” continues, then publishers need to know that in the long run they will loose and the author will loose even more.
I cant believe that all the publishers are drinking the ”i” cool-aid???
I agree with other posters here….piracy will rise to meet the challenge.
There already programs you can download to break adobe drm for heavens sake.
Oh..and who wants to read an ebook on a LCD screen for any extended period of time?…lunacy
Ok, I have fallen for the same territorial rights problem with Diesel. Did not notice any ‘restrictions’ noted in the ordering process – [probably my own fault], so where does one go now? I find the whole territorial rights thing appalling. Authors get royalties for works sold – including epubs. Why the publisher restrictions? It truly is an irritation that needs to be worked through.
I got nailed by DRM when I tried to purchase an e-book for my Ipad here and Diesel refunded the money 2 hours later. Customer service like that is getting rare these days and I appreciate that Diesel treated me as someone with integrity; if I was willing to pirate, I could get quite a few books but that’s not something I can live with. Is there an e-book reader that reads these “new and improved” epubs or should I just stick to indie/worldwide right titles? Which formats will work on my Ipad? I’m feeling cautious now in regards to future e-book purchases and I really don’t want to give my money to Apple when I could support Diesel.