E-books and E-rights

We've had a number of questions lately related (more or less) to e-books...

Dan wrote to ask, "Chip, can you tell me what you mean by an 'e-book'? And what are my e-rights?"

Okay... the text of a book that is delivered in a digital format to an electronic reader of some kind is an e-book. The two most popular e-readers are Amazon's Kindle and the Sony Reader. Both are about the size of a trade paper book, with an electronic screen on which you read the text of the book. When you buy an e-book from either company, it is simply sent through the air to you. There is no hard copy; no ink, paper, or binding. The Kindle uses cell phone technology, so it arrives on your machine using the same technology as that of a text message. The Sony plugs into your computer, so the book arrives like an email attachment that you download to your reader. The e-book itself is just like any other book you buy and read, except it doesn't take up any space on your shelf and you can't loan it out. (On the other hand, you also can't lose it. If you ever had a meltdown and lost the book, either company would replace it for free.) You look at one page at a time on your reader's screen, it's formatted to look like a book -- and trust me, it IS a book. If you use one, it'll only take you a couple hours and you'll get used to reading a book on an electronic screen, then you'll love it.

I tried the Kindle and liked it. Since it uses cell technology, it's easy to download books. The screen is nice. Amazon has made about a quarter-million books available for it, and many are priced a bit lower than the traditional book. It's small and light (think of it as a small clipboard), and you can type notes into the margin of the text. The cost is $359, and the new version will hold more than 1000 books.

I bought a Sony Reader. It costs a hundred bucks less, they were giving away 100 free books with each purchase, and I think the Sony feels more like a book (the Kindle is plastic and felt, to me, more like a toy). My Sony reader is sturdy, has a leather-like cover, and hasn't broken when I've dropped it on airport floors. I also liked the screen on the Sony better, though that's much debated by users. Both are very readable, so you don't feel like you're reading a computer screen all day. But my real reason for buying is because all the publishers have been using the Sony, so the people in the industry are definitely tending that direction. Downloading books on the Sony is clunkier than the Kindle, but my own purchases have proven cheaper on the Sony (that's obviously based on my own small research, so don't take that as gospel). The best part of using e-books? I no longer have to lug a stack of manuscripts home with me. I load them onto my reader, and I walk out of the office with my little, book-sized tool in my hand. Editors and agents who are reviewing a bunch of submissions love this device.

Your "e-rights" are the electronic rights to your work that you grant a publisher in your book contract. Until last year, nobody made any money with e-rights, so it wasn't seen as being a big deal. Then the Kindle and Sony Reader sparked interest, digital book sales were up something like 400%, and it looks like these will be important income producers with the next generation of readers. Where there's money, there is interest... so now everybody is talking e-rights.

Janice noted, "My publisher offered to have my e-rights match my print rights. Is that a good deal?"

Nope. Most publishers have settled on about a 25%-net royalty rate to the author. The publisher saves a lot of money on e-books, since there are no paper, ink, or binding costs, nor is there traditional warehousing or shipping. It still costs the publisher the same amount to produce the initial book (editing, copy-editing, interior page design, etc), but there are certainly cost savings once the manuscript has been readied for market. So the investment is considerably lower, and the return paid to authors can be a bit higher than standard print royalties.

Think of it this way: Publishers are not sub-licensing your digital rights by sending them out to another company in order to produce the book. Instead they are treating digital rights as simply a different form of the book -- a "digital binding," if you will. That requires a clear clause in your publishing contract that spells out what you're going to be paid. That said, there is one as-yet-unresolved question about e-books... the fact that there is no physical inventory to track, no SKU's, and therefore no real check-and-balance for an author to know how many copies have sold. (Like many things in this industry, there's a trust between author and publisher. That's the business.)

One other thing to be aware of in your digital rights, Janice, is the notion of reversion. Does having an e-book for sale on the company website constitute being "in print"? That's an issue agents are now dealing with. Some feel there has to be a traditionally bound book for a contract to be in force; publishers prefer that any form of a book being sold constitutes a version being on the market. This is probably moving toward a sales threshold as the solution -- if the publisher sells X number of digital copies in a year, the book is still considered "in print."

Claudia wrote to find out, "Will the move toward e-books increase the speed at which books are brought to market? Since there is no printing or shipping time, will the lag time between completion and distribution be shortened?

I doubt it. The time lag that exists now between the completion of the book by the author, and having copies for sale on store shelves, is not one of production. The technology exists to complete a book one day and print it the next. The gap between "completion" and "availability" is sales-and-marketing driven. If you turn in a book to your publishing house, they need time to chat it up, create buzz, get the marketing machine worked up, talk to retailers about it, and figure out how many orders are coming in. While an e-book might allow an author or publisher to respond faster, I don't see this changing significantly the way books are sold in the near future. The "immediate response" type of thing is more the domain of magazines and the web -- so you'll still be able to get the same uninformed, emotional, and biased rantings of people who can listen to the President speak this morning and have a really stupid response to it before we all sit down to dinner. So don't worry -- there will be no shortage of pablum in your publishing future.

And Len wrote to say, "I've heard you sound a bit reluctant to fully endorse what Amazon is doing to promote e-books. Why is that? What is it about the situation that makes you uncomfortable?"

Well, I am reluctant. Amazon is treating the Kindle and all the related e-books as proprietary properties -- which is legit, since they developed it and are the sole retailers. Sony did that once -- they produced movies in Beta, which was much clearer and more vibrant than movies on VHS. But Sony refused to share the technology, so everybody bought VHS machines and Beta disappeared. (It's still great technology, and most of the Hollywood movies you see are filmed on Beta...but the company screwed up by trying to corner the market on movies purchased by consumers.) The fact is, when you own a technology, it's easy to charge an arm and a leg, since you don't have competition. But as the cost of the hardware gets easier to produce, they should get cheaper. I'm afraid Amazon will continue charging $359 for the Kindle, which is too much. And I'm afraid they'll try to block others from using the technology, which means the market will look for alternatives (and find them). Those two concerns keep me from predicting world domination by the Kindle. If you could find a $99 e-book reader, and a ton of cheap books to play on it, my guess is that you'd buy one. I'm not convinced the folks at Amazon will be able to resist the urge to rule the world and make millions.

Got a question? Send it my way.

Comments

[Jim MacKrell]

Chip, what is the life of books on Iphone or Blackberry as opposed to Kindle or Sony Reader?

[Lynn Rush]

Great post! I didn't know much about the kindle/Sony Reader. Thanks.

I suppose Apple will come up with something as well, huh? For the Iphone......should get interesting.

[Randy Mortenson]

I bet Amazon gets a huge jump on this, not to the extent that Apple's iPods tower over other mp3 players, maybe, but something like that. They've got the name, Kindle, which seems to be catching on (rather than "your-brand-name e-Reader"). And they're leading the way innovatively, with the Kindle 2 (which at least didn't increase in price over the original).

And marketing is totally different than with Sony's Beta, which they had to market to all the electronics stores as well as to the consumer. Amazon's market comes straight to their front door, where we see: ahhhh...The Kin-dle! (cue "The Simpson's" theme).

[Irish B]

Bravo! Bravo!

Awesome post. I did learn something helpful today from reading your blog and I thank you for it.

BTW, Amazon have created a kindle app for the iphone. Now isn't that something? That was the biggest news that I've heard so far this morning. Makes you think. What's your take on Amazon creating an app for the iphone? I heard the news on Silicon Alley Insider.

[Jim MacKrell]

I just saw the film effort by Barnes and Noble Studio on the attempt at video promos. In a word "Awful" no drama, no kicker, no hook. It looks like a college production that was afraid to 'sell' something for fear of being 'commercial' After years in Advertising I believe that video like this may hurt more than help the sales of a book. Its one thing to hide boredom under the covers of a book and quite another to make a mini video that proves boredom to the world..