Publishing Industry Contends with Uncertainties of E-Books
Doreen Carvajal N. Y. Times News Service, THE JOURNAL RECORD
When Peter Mayer felt the slim weight of an electronic book in the palm of his hand, he suffered instant pangs of dread.
There was no reassuring crackle of paper or the faint scent of ink that had been a constant in his career in publishing, for two decades as chief executive of Viking Penguin and now of his own independent company, Overlook Press.
"I respect it," Mayer said of the electronic book that could change the dynamics of his business, "but I have an emotional and professional investment in what I know. And when I was young, I knew that I could conquer any change, and now I don't know what's ahead." Such wariness is prompting Mayer, and some authors and agents, to shy away from books made of bytes until a clear view develops of the rapidly emerging market for electronic readers. The culture of technology has collided with the slower-moving book industry, which is engaged in a tense, early clash over how to divide up the spoils of an infant business that is still difficult to picture in scope and potential. "This is a scramble over who controls what," said Laurence Kirshbaum, chief executive of Time Warner Trade publishing, a Time Warner unit that includes Warner Books and Little Brown. He noted that "we're not being motivated by what's to come, but a fear of being left out as the train is pulling away from the station, with some exotic station in mind." For the first time in five years, the New York-based Authors Guild mailed out contract warnings last month to some 7,500 members. The letter criticized current e-book contracts as bad deals. The guild said it considered distribution fees for electronic book manufacturers a payment scheme that would deny publishers and authors the rewards of the Information Age. Some prominent literary agencies are also advising authors to refuse electronic book agreements unless the contracts promise to revise the deals if electronic editions rapidly gain popularity. But in turn, some publishers are refusing to make that concession, which means that many popular books are staying firmly on the bookshelves instead of a digital page. In the last three years, start-up technology companies have pushed forward with plans to make electronic books as ubiquitous as mass market paperbacks. This month, Nuvomedia will expand its sales of $500 versions to stores, while Librius is preparing to begin selling its slender 12-ounce pocketbook-sized model for $200 in July. Softbook Press has been lining up deals with corporations and school districts that are eager to eliminate lockers and reduce backpack strain on students laden with textbooks. Softbook's version, with note-taking and scribble functions, sells for $299. The first e-books became available late last fall. Barnesandnoble.com, for example, has about 500 titles available for sale and downloading and has sold about 15,000 copies in this format. In general, the privately held manufacturers will not say how many of the electronic readers have been sold, but a Barnesandnoble.com spokesman, Ben Boyd, said the company had been "pleasantly surprised with the pace that customers have purchased these devices and titles." The numbers may seem small now, says Chuck Verrill, a literary agent with Darhansoff & Verrill, but "the issues are profound in their long-term impact." "And we want to see the market grow, but we want to make sure the terms are fair," he said. The agency's authors, including Arthur Golden and E. Annie Proulx, are avoiding the electronic format until they reach better deals with publishers. The devices that are inspiring all this anxiety weigh from 12 ounces to more than two pounds and carry brand names like Rocket eBook, Millennium E-Reader and the Softbook. They seem rather expensive now for leisure reading, but eventually the manufacturers expect the cost to fall below $100 or plunge to nothing as e-books are given away like cellular phones to entice customers to buy and download books, newspapers and magazines. With almost missionary zeal, the entrepreneurs developing the e- books from the West Coast and a culture of technology are predicting changes in a publishing industry centered in New York and steeped in tradition. "I think they're going to be everywhere," said Devin McKinney, director of content services for Softbook Press. "I think that 50 percent of the books are going to be published in electronic form and not in paper." Publishers say they do not feel threatened by the development of the electronic book because they do not think the form will replace conventional books for adult readers who will always want to savor the familiar touch of paper. But a new generation of young readers may have different notions about what constitutes a good book. Some school districts are already negotiating to buy the Softbook for students to essentially create "textbook-free" schools where students can download books and packets of course information over phone lines. For instance, the Davis Joint Unified School District in Davis, Calif., is expecting to learn this month whether it has received a $6 million federal grant to subsidize the purchase of some 3,000 electronic books that will be shared among 7,700 students. But if educators see immediate benefits, publishers are showing more caution as the first deals are struck for electronic rights that could set a pattern to last the life of a copyright. When authors try to make the case that paperless books will result in cost savings, Random House, the top-ranking publisher, expresses private misgivings. In an internal memo, the company said that "a generally held misconception is that publishers will make greater profits on e- books since the costs of paper, printing, warehousing and delivery are saved." "This ignores the different kinds of costs that are incurred in handling e-books," the memo said. It then listed the added expenses of formatting manuscripts for electronic books, protecting digital material from piracy and granting higher discounts to e-book distributors. But the Authors Guild does indeed expect savings from lowered paper and printing costs and so, as the guild's director, Paul Aiken, put it, "the result seems clear: Authors should receive a significantly higher royalty for e-books than they do for physical books." The Authors Guild says that now, a writer might get a share as great as 15 percent of the list price of a book as a royalty. The structure for an electronic book is about the same, but can run as low as 4 percent. In a conventional contract for a hard-cover book, the publisher gets about 35 percent of the list price while the distributor gets 15 percent and the bookseller keeps 35 percent. Wit the new electronic rights agreements that e-book manufacturers are getting from publishers, this structure shifts, with publishers getting 25 percent to 40 percent, booksellers 35 percent to 40 percent and distributors 20 percent. In particular, the guild has assailed the new cut for Nuvomedia, which it describes as a combined "whopping 60 percent distribution fee" to Nuvomedia and Barnesandnoble.com, which sells the electronic titles. Not surprisingly, such sentiments anger e-book manufacturers like Martin Eberhard, the chief executive of Nuvomedia of Mountain View, Calif., even though the parent company of Random House, Bertelsmann, has invested in his company and in Barnes & Noble. At the annual Book Expo America in Los Angeles, which draws thousands of booksellers and publishers, Eberhard sat in his exhibit booth, fuming about Random House's arguments and the Authors Guild letter, which also contended that "profit margins for publishers and royalty rates for authors should soar with these sales." "If the publishing industry doesn't let up on these squabbles, it will hurt them," he said, adding that the combined 60 percent share for the distributor and bookseller had since dropped to 55 percent of the list price of a book. Eberhard contends that the costs of publishing an electronic version are lower than conventional formats and so authors can improve their shares. But he complained that Random House was taking credit for bearing the costs of encrypting digital material "because they're trying to get the best royalty rate that they can." However, Random House's general counsel, Harriette Dorsen, said: "Publishers do the formatting and each device needs to be individually done. Upgrades are required for new upgrades of the devices." In addition, she said, the costs of encryption are passed back to the publishers through higher discounts granted to e-book manufacturers. Some literary agents contend that Random House has taken tough negotiating positions by refusing to allow contract revisions as the market grows. But Dorsen said: "This is emphatically not correct that we have refused to revisit the issue of royalties. In fact, we understand that in a changing environment, with a business in its infancy, there will be changes in the way this business is done."…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Publishing Industry Contends with Uncertainties of E-Books. Contributors: Doreen Carvajal N. Y. Times News Service - Author. Newspaper title: THE JOURNAL RECORD. Publication date: June 14, 1999. Page number: Not available. © 2009 THE JOURNAL RECORD. Provided by ProQuest LLC. All Rights Reserved.