Does the Google Amended Settlement Agreement Matter?

The New York Times and paidContent have weighed in on Daniel Chin's recent ruling rejecting the Amended Settlement Agreement between Google and a number of publishers and authors. Does an agreement really matter?

Legal agreements help aggrieved parties recover damages when a law has been broken. In this case, copyright law. Justice Chin threw out the agreement because it was too broad, which points out the first problem with the case: copyright law may have been broken, but the law itself is broken.

Chin doesn't want to do congress's job re-writing copyright law. He wants congress to fix copyright laws written before digital information was a twinkle in any lawyer's eye, to update the law so that authors, publishers, distributors and retailers know how to play with each other in today's world of cheap memory, OCR, and digital reading devices.

After Chin's ruling, the parties have signaled they will attempt to reach a less far-reaching agreement. This points out the second problem with the case: at this point, the aggrieved parties aren't so aggrieved.

Google has an economic advantage that increases over time. Books that haven't seen the light of day practically since their publication are now both searchable and purchasable. Publishers have no incentive to dig out all the out-of-print books to sell a few incremental copies. Google, on the other hand, has the incentive of increasing the value of its search results by including off-line information its competitors lack. The by-product of Google's industrious book scanning is found money for the publishers, incremental sales of out-of-print books. The only thing to negotiate, really, are prices and percentages.

Google has scanned about 15 million books by now, of which 2 million are public domain. There is one real legal problem, as paidContent explains:

[Google] scans in-copyright and in-print works, and despite suing Google over the scanning, publishers are working with the company to make sure their new books show up in Book Search. Typically, searchers can peruse about 20 percent of those books for free, and then have an option to pay for a full digital copy. The problem is the middle zone—books that are in copyright but out of print. Google Book Search can only display a tiny snippet of those works, and it’s impossible to purchase full digital access.

Presumably, that is the problem Google and publishers will address in the next version of their agreement. And maybe congress is off the hook. For now.

Authors Discuss the Move to Self-Publishing

Authors Barry Eisler and Joe Konrath discussed self-publishing in a Google Doc Discussion they later blogged. It's a little long-winded, but the dialog boils down to why Konrath forsook his publishers: "My switch to self-publishing isn't personal. It's just business. I can make more money on my own."

Buried in the banter about the writing world are a few nuggets for writers weighing their publishing options:

• We figured out that the 25% royalty on ebooks [publishers] offer is actually 14.9% to the writer after everyone gets their cut. 14.9% on a price the publisher sets. As e-book prices fall, these margins incent authors to self-pubish. At a price of $3, published authors net less than $0.50 per copy. Without a publisher or agent to collect, an author would expect to collect more than $2.00 per copy. In most cases, there's no reason to expect a publisher to sell 4x as many books.
• My own sales, and the sales of other indie authors doing well, pretty much confirm that a rising tide lifts all boats. Virtual shelf space functions a lot like physical shelf space. The more buyers congregating anywhere, the more sales, and all the trends show e-books overtaking paper books. The same is also true for an individual author. The more books or stories you have to sell, the larger your section of the e-store.
• I originally self-published The List in April of 2009. It went on to sell 25,000 ebooks at $2.99. Now, two years later, I lowered the price, and it's selling 1500 copies a day. Things like that don't happen in paper. Do the math. 25,000 copies at about $2 per copy is $50,000. If the reduced price is $0.99, 1,500 copies per day is netting about $500 a day, or $180,000 per year.
• On the digital side of the ledger, publishers don’t add much at all because there’s nothing to distribute. Or, to put it a little more accurately, what publishers can add on the digital side (editing, copyediting, proofreading, cover design, jacket copy, formatting) can all be done by other players at least as well. On the paper and digital sides of the ledger, publishers also have great contacts in mainstream media. They can get an author on the Today Show, or make a connection to their film and television cousins. And they still own distribution of paper-based printed products.

Read the entire conversation for more details. These two authors have lots of fun war stories, and a real-life perspective on the trade-offs of working with publishers and self-publishing.

eBook Price Elasticity

Tech Dirt reports here on JA Konrath's eBook pricing experiments. As expected, lower prices generate higher unit sales and better net results – at the expense of much lower marginal results.

Credit cards and other payment systems have fixed transaction costs that always have made the micro-transaction market problematic. The price elasticity curve is fighting these fixed costs when prices go below $2-$3. Authors typically receive 70% of sales for products with a price above $2 today, but only 35% for products under $2.

Who knew that future authors would be working for Visa and Mastercard?

Maybe there is an opportunity for an online publisher who sells $20 of credit with an offer like buy $20 of eBooks and get one free. Reducing the transaction costs per dollar of revenue could provide authors with a higher percentage of the sales for <$2 products.

eBook gift card business, anyone?

100M e-Reading Devices By End Of Year

The analysts at IDC are saying that 2010 saw sales of 18M tablets (mostly iPads, but a smattering of Android devices) and 13M e-Readers (mostly Kindles). The same analysts expect unit sales to double in 2011.

Authors take note! By the end of this year, about 100M e-reading devices will be looking for content.

Don't think that you will get 1% of this market if you simply post versions of your book in online stores. For the first time, though, if you got 1% of the online market, you would make a tidy sum. Now is the time to put together your online marketing plans with iPad, Android, Kindle, and Nook in mind.

The $0.99 Book

If you're a new author, should you self-publish? Should you sell your books for $0.99? Give them away? The publishing market is changing so quickly, it's hard to know:

Christopher Smith, who wrote the novel "Fifth Avenue," priced his novel at $2.99 when he launched it last October. He says that with some social media outreach--he did an iPad and a Kindle giveaway for those who tweeted about the book--and little else, the book quickly reached the Amazon Top 100 and peaked at No. 4. After the initial rise, Smith then decided to drop the price of the book to 99 cents to maintain his ranking in the top 100, which is key to generating sales.

As the volume of Kindle, iPad, and other e-readers increase, authors have a powerful way to circumvent traditional publishers to reach their audience. For $0.99, many readers will download a book they'd never consider buying in print for $15 or $25.

My friend Janet Ference is trying the more radical price of $0.00. Free! She's created Blue Fern Press to distribute stories on scribd and one-tweet stories on twitter.

If you have musician friends, you've seen this before. Musicians have found ways to market and distribute online, and earn big bonuses when a studio licenses a song for television or film, or when a publisher sees a musician's success and makes a deal.

In fact, authors can expect a book ecosystem similar to music. The success of Smith's book marketing led to an agent deal:

Thanks to some controversy over gay sex scenes in the book that touched off heated discussions in Amazon's Kindle message boards, Smith says "Fifth Avenue" remained in the Top 100 for three months and also has done well on Amazon's U.K. Kindle Store. His sales, he says, are in the "six figures," and he's now represented by an "A-list" agent, Matt Bialer at Sanford J. Greenburger.

In the online world of book sales, a new combination of e-reader popularity and low prices is changing book distribution in ways that give authors more options to succeed in the market.