Monday, October 27, 2008

Publishing, ebooks, Amazon ... and the future

In almost every part of the publishing industry the plaintive question is the same: "Where did the customers go?!" Readers aren't in a buying mood ... they're looking to get "more for less," and who can blame them? I know I've said this before, but when you're trying to make the mortgage, car payment and cover the power bills, and you have a hankering to eat once or twice this week, something has to go -- and the first things to get nixed are your luxury goods and services.

Books, DVDs, music, the salon, the more expensive restaurants and boutiques, that $25 bottle of wine, the trip to Tahiti. All of the above turn into a trip to the book exchange, Blockbuster to rent something, DIY primp-and-preen at home, a swing by Pizza Hut, a swift duck into K-Mart for a teeshirt, beer instead of wine, and a weekend camping.

All very good for your budget -- and "good on you," because these are the strategies through which you will survive the lean times and come out the other side of this (gak, choke, retch, puke) global recession with a nice life.

The other side of the coin, though, is what's happening in the luxury goods and services market! Just have a look at these stats for book sales in the USA, and give a thought to writers, publishers, booksellers:
    Among the book groups registering decreased sales were higher ed, down 30.5 percent to $8 million; religious books, down 21.5 percent to $34.2 million; children's/YA hardcovers, down 19.9 percent to $39 million; university press paperbacks, down two percent to $2.7 million; the important adult hardcover sales category, down 4.6 percent to $110 million; and children's/YA paperback sales, down 3.1 percent to $39.3 million.

    Not all sales were down. Among the book categories registering increased sales were inexpensive e-books, up 19.9 percent to $3.4 million; university press hardcover sales, up 12.1 percent to $5.6 million; adult mass market sales, up 4.7 percent to $53.2 million; adult trade paperback sales, up 4.5 percent to $118.3 million; and audiobooks, up 1.7 percent to $12.6 million.

That post on Book Publishing News, Book Sales in Decline as U.S. Economy Contracts, goes back to July 13th, a couple of months before the "big crunch" we're feeling now. You know what'll have been happening in the last few weeks, since Wall Street started to melt down.

But out of the gloom comes one stat which makes you lift a brow. The antennas go up ... inexpensive ebooks are up almost 20%.

Meaning, people still like to read. Some are shopping for used books; some are buying sale stock off the remainder tables. Both of these shopper strategies are Sudden Death to publishers and writers, incidentally. Writers don't get paid at all for remainders and used book sales ... publishers lose a ton of money. Here's another quote from the same post as above:

      "Most bookstores buy stock for 20 to 40 percent off suggested retail," May said. "But they can buy remainders and other bargain books for as much as 90 percent off retail price. That means they can sell the books for less in a time when consumers are spending fewer dollars on books, and still make a higher profit margin."

    Do read the whole thing if you have an interest in any part of the book trade ... it's well worth a look.

    But other readers are willing to embrace the concept of ebooks. And, as a writer, I have to say this interests me strangely. From my own experience, since the Keegan books were uploaded to, I know that ebooks sell at least as well as paper copies...

    And Amazon also sells ebooks these days ... for high prices as well as budget prices. The way it works seems to be, if you want your ebooks sold via Amazon, you get them registered with one of the electronic fulfilment companies (Lightning Source, for one), and "enable" Amazon sales.

    So you know we'll be looking at this, as soon as the project to get all the Keegans up on Amazon is complete. I just had a look at the "Kindle Store" and to date there are 7,779 titles listed under Science Fiction, and 1,082 titles listed under Gay.

    (Incidentally, keeping you up to date with Keegan's progress to Amazon: we're now three weeks into the process of publishing THE SWORDSMAN to Amazon via CreateSpace ... and still waiting for the book to show up in the book search engine at Amazon. It takes a solid month to get a new title through the cogs and gears of the machine, and "up there." We have another week to do. Meanwhile, both the gay vampire books have been re-published in the last week, but they have a loooong way to go before they show up at Amazon. It's a long, infuriatingly slow process. The pilot (proof) copy of NOCTURE was shipped in three days ... we were just lucky to get SWORDSMAN shipped overnight. Now, we wait for the post office to deliver; and USPS warns it can take 28 days for delivery. Yeeeouch.)

    Now, the downside to the Amazon kindle thing is the price of the doohickey itself. A Kindle reader costs US$359.00, ... which is something in the nature of A$650, and to that you can add postage and insurance. It'll be costing A$700 for an Aussie reader to buy the damned thing, and about NZ$800.

    Very few readers down here would be investing in this, when you could buy about 70-100 used books for the same price! (If you're interested and haven't seen the Kindle, and in fact the price sounds okay to you ... perhaps you're in the US or Canada ... here's the link to take you right there:

    Now, having said all that about Aussies and Kiwis not being in the market ...

    About 90% of all book sales we make take place in the US. And right now, you know from the statistics given above, US readers are slowly making the switch to e-gear, with ebook sales up almost 20% as long ago as July, before the krapp started to hit the fan.

    I'm going to go off at a tangent here for a minute. Three YEARS ago, a Chinese economist based in Hong Kong and writing for China Daily, analyzed the American financial situation ... the way George Dub-yuh is covering the deficit by selling Treasury Bonds to the central banks of countries like China, Japan, Russia, and printing money to cover said deficit. This economist predicted the entire Big Crunch we're suffering right now -- with one exception: he figured it would happen in 2006 or 2007. He was off by twelve months:

    Let me give you the high points ... but please do read the whole thing! ...

      The US Government indebtedness is financed this way: The US now runs a trade deficit roughly 6.5 per cent of its GDP and the gap is widened every day. Its citizens are spending ever more on foreign goods, and with the US dollar as the international currency, the US Government just prints money to finance the deficit. And with this money, central banks in the surplus countries purchase most of the US Treasury bonds as currency reserve.

      By now, Japan is the largest creditor of the US Government, and the Chinese mainland has been a fervent buyer for the last few years. As for Hong Kong, most if not all of our reserves are in US dollar denominated assets. The US Government in turn uses this foreign borrowed money to finance as much as 90 per cent of the federal deficit which stood at US$412 billion last year. The federal deficit is expected to be running at about US$2 billion a day at the moment.

      Put it simply, the Americans have been living way beyond their means for much too long. On top of this, the Bush Administration is cutting tax at least three times while fighting an expensive war in Iraq, which has already cost the country US$700 billion, and currently progressing at US$5.6 billion per month. Now the US economy is dependent on the central banks of Japan, China and other nations to invest in US Treasuries and keep American interest rates down. The low rates keep American consumers snapping up imported goods.

      Any economist worth his salt knows that this situation is unsustainable. This includes the country's economic guru driver Alan Greenspan, who recently warned his countrymen that the federal budget deficit would hamper the nation's ability to absorb possible shocks from the soaring trade deficit and the housing boom. Now he may have to add two more worries: soaring oil prices and cyclones.

      The US is now clearly in huge trouble, economically, socially, politically, and internationally. The Bush Administration bungled big in cyclone Katrina's aftermath in New Orleans, and then a minor rerun from Rita in Houston, and this will trigger the general outburst of people's dissatisfaction with the government, leading to great internal turmoil lasting for many years. In all likelihood, long-term interest rates are going to rise, and the greatest property bubble the world has witnessed is going to burst in the next one to two years.

      The countdown is in progress, and there is no way that anybody can do anything to reverse it either by short-term measures such as fiscal and monetary policy, or through long-term reform of tax policy, entitlement programmes and even the entire federal budget. This is as inevitable as gravity, and it will take place under a new and inexperienced chairman of the Federal Reserve Board. I do not want to sound alarmist, but I see very bad omens.

      To make things simple, let us just examine some key economic issues raised by some economists:

      What if the dollar plummets? Do stocks follow? How about pensions?

      What if interest rates soar? How would all the new homeowners, who stretched to buy with adjustable and interest-only loans, cover their mortgages?

      How would consumers with record credit-card debt make their payments? Would they stop buying? Stop taking vacations? What will happen if they go bankrupt? New rules going into effect later this year make it harder on such debtors.

      How would a government, which depends on the taxes of a strong economy to operate, keep all its promises?

      To us, the good news is that when the country is in deep trouble, the US will not have the energy to pick on China. Even when it is necessary to start another war to divert people's attention, it would pick one much smaller in size and weaker in strength, like Iran. This will provide a much more amicable environment for China to make good use of its "period of strategic opportunity" till 2020 for the country to pass through a turbulent zone between per capita income of US$1,000-3,000. other words, it's absolutely no surprise that what's happening is happening. The practical upshot of this is that publishers and writers are going to have to find a way to navigate through the troubled waters ahead.

    To begin with, surveys say plainly, less people are reading less often, and spending less on books ... and growing numbers of Americans can't read at all! Hard to believe, I know, but check out this article from The New Yorker ... and it's almost a year old! ...

    Shocking, isn't it? So, on a global basis, the reading public can be said to be contracting to a core of folks who LOVE to read, and probably read all the time for the pleasure of it. That's no bad thing. But at the same time, these readers are finding it harder to afford the book AND the groceries. So, prices must come down ... and how do you manage that, with the price of everything from gasoline to gumdrops heading north fast?

    Bookstores are looking at remainders at sale prices (which is Sudden Death for publishers and writers, as related above) ... and at the same time ebook sales are increasing. Fast. Very soon, ebooks will be commanding a market share that is impossible to ignore, and they will become very attractive indeed.

    Food for thought, isn't it? And it's giving Keegan a sense of direction for 2009.

    For the moment, if you're reading this and have no idea who this Keegan dude is, but these gay ebooks are sounding pretty interesting, here's the Ebook Kiosk on my website:


    No comments:

    Post a Comment