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Summary:

Sacre bleu! Amazon and Google’s digital book efforts could force publishers to slash prices and put them out of business, says Arnaud Nourry, head of French book publisher Hachette. He is concerned that unilateral pricing by e-book resellers like Sony, Amazon and Barnes & Noble could […]

earths-biggest-selection-450px-_v251249388_1Sacre bleu! Amazon and Google’s digital book efforts could force publishers to slash prices and put them out of business, says Arnaud Nourry, head of French book publisher Hachette. He is concerned that unilateral pricing by e-book resellers like Sony, Amazon and Barnes & Noble could destroy publisher profits. “On the one hand, you have millions of books for free where there is no longer an author to pay and, on the other hand, there are very recent books, bestsellers at $9.99, which means that all the rest will have to be sold at between zero and $9.99,” Nourry was quoted as saying in today’s Financial Times.

This is only partially true, of course. Books have a long and very rich history that cannot be easily replaced by electronic versions. There are many bibliophiles (including myself) that have shelves full of books that won’t get tossed aside in favor of my Kindle — a gadget which, at the moment, has a malfunctioning screen. That’s a problem I don’t run into with a paperback. There’s nothing quite like going into a bookstore and browsing the shelves looking for your next great read, so the electronic revolution won’t affect books as much as it has music and movies. There’s something romantic about a physical book that just isn’t there with CDs and DVDs — perhaps because the printed book has been around for hundreds of years, and audio and video have gone through a quite a few format changes in their short existence. This also makes books unique in the content realm, in that they are quite difficult to pirate.

Regardless, Nourry has a point. He claims that retailers like Amazon are paying more than $9.99 for each e-book, thus selling them at a loss. He goes on: “That cannot last…Amazon is not in the business of losing money. So, one day, they are going to come to the publishers and say: By the way, we are cutting the price we pay. If that happens, after paying the authors, there will be nothing left for the publishers.” It’s not clear if that is true or not, but we do know that Amazon takes 70 percent of newspaper and blog subscriptions on the Kindle, with only 30 percent going to the content maker. Further, is it really a bad thing if the publisher is left out in the cold? Reading the rejection letters of hit authors makes one wonder what need there is for publishing houses at all, in the age of the Internet.

That’s what Mr. Nourry is so worried about. He is terrified that authors (and Amazon) will realize that they don’t really need his industry to get things done. Don’t worry, Arnaud. Yes, prices might go down and your cut may shrink — but perhaps you should be thankful that people will still be buying books in 10 years. That’s more than can be said for CDs and DVDs.

  1. Children, can you say “disintermediation”?

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  2. This is fascinating. Publishers do more than publish. They help edit and market and provide a host of services beyond distribution. Just because Amazon can get a certain margin today, doesn’t mean they can get it tomorrow. Margins tend to decline for everyone over time as an industry matures. And it doesn’t mean that all types of books and manuscripts are likely to be read by electronic reader owners.

    So for now, do you really see the entire publishing ecosystem being replaced by Amazon or Sony? The publishing industry needs to take a hard look at itself and do a better job of marketing it’s value to both the content providers, the distribution channel & us readers. A book is an experience, not just content (digital or otherwise). It can be a rich leather binding to be displayed, or pliable enough to stick in a jeans pocket, or tough enough to hold up to sand, sunscreen & water. And sometimes, I’ve been know to dog-ear a page or write margin notes. And if everything is directly published to the Amazon library without the research, advice & marketing of publishing staff, IF we can find a book, us readers know the difference between quality writing and schlock.

    So while electronic readers, such as the Kindle & Sony unit that my local B&N rep demoed for me last Christmas will undoubtedly grow in popularity, they are not being accepted at the rate of radios, mobile phones, televisions or PCs. I personally don’t know anyone who has purchased one, and I live in a very well-read, technology centric, university city. So I suspect their will be co-habitation of print media & electronic media for some time to come.

    Didn’t Spock give Kirk the bound book, “A Tale of Two Cities” as a birthday gift in “The Wrath of Kahn”? Will things change – absolutely. I just don’t believe that it is an all or nothing end game.

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  3. What a bunch of baloney? Book profits are not going to go away; they are going to go up! Electronic delivery is lowering distribution costs, which is lowering the price of books to consumers. From here the laws of economics are clear, lower price = increased demand. People will read more because books are more convenient and cheaper. The more people read the more valuable good writing becomes. OK, there will be shifts in the distribution of revenue, but the total revenue from books will go up not down.

    On the second mushy romantic point about how you will always enjoy the love of your bookshelf, poopycock (smells worse than popycock). I loved my 8 track player too and I loved my collection of VHS tapes. My granddaughter still watches my collection of Disney VHS tapes but she watches Youtube more.

    The economics are compelling. Night before last, I needed a book from the library. I looked it up online and quickly downloaded it and three others. My marginal cost was zero and I saved an hour of time plus 24 miles round trip! At $20 per hour and 50 cents per mile, I saved $32 in about 3 minutes. I have the digital books on loan for 7 days.

    Yes, I will continue to buy books. There are books I want to own. But, digital copies are better than paper copies. Even when I buy a paper book, I add it to my Google Book Reader. When I search for collection for keywords and phrases, Google snips a few lines and tells me the pages where I can find these words. Education instruction designers are fond of saying that they are pleased to accomplish two of their three objectives: faster, better, cheaper. Digital books accomplish all three.

    A switch will not be flipped to stop all paper publishing, but, gradually, economics wins. The physical delivery of mail is a dying horse, the physical delivery of newspapers is another dying horse, “bookstores” are not dying but they are metamorphosing. People will continue to gather in “bookstores” where they will use high speed WiFi connections to review and select magazines, books and newspapers. Group games will be played and multiple conversations threads will be active. “Bookstores” will be busy places but most of the rows of shelves will be replace with places to sit.

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  4. I’m not so sure people will be buying many books in a few years. They might buy nice hardback versions of books they have real affection for but it seems obvious to me that there will be some kind of “spotify model”, whereby people have subscriptions to access all the books from all the publishers all the time over wireless.

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  5. In other news, the telephone operators union lamented the rise of automated exchanges.
    C’est la vie .

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  6. There is a certain “tactile” aesthetic to books that cannot be over come by e-readers. It doesn’t feel the same or evoke the same sensation to read a kindle curled up in an armchair or in bed as it does with a book. Using something like Sony’s device or the Kindle will always fell like being stuck in front of yet another screen and until that feeling can be replaced books will continue to have a long future.

    An reference books will always be best in printed format. In my experience reference books are often only as valuable as the notes scribbled in the margins!

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    1. Paul: there is certainly a tactile aesthetic to books, much like there is for LPs, CDs, and telephone boxes. However, the public will vote the same way with books as they did for all those old formats. The iPod killed the CD over time. The Kindle will kill the book in the same way.

      Ok, that’s not entirely true. I think there will be many types of books that will remain in physical form – art books, guides, maps etc. But novels and newspapers? They will be fully electronic in 5 years, other than the paper copies bought by the same grannies that still buy filament lightbulbs.

      Kuhn said that shifts in science are not brought about by existing people being convinced of new ways of doing things. Those people die, and are replaced by younger people who are not stuck in the past. The same is true of technology. I know plenty of people with VHS players, but they are all over 60.

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      1. Hywel: While I mostly agree with you I must say that it is not about being stuck in the past.

        I read a lot, on my laptop, reader, iPod Touch etc.. but there is never a feeling ownership with an e-book. A

        This is not about science or technological progress, ebooks are about convenience and in the same way that you get a better feeling of satisfaction from a home cooked meal than you do a frozen dinner nuked in the microwave physical printed books will always feel better and more satisfying.

        True you get the exact same content in an e-book, but you loose so much else.

        Beyond the sensibilities of reading, books are decorative (people proudly display their book collection), a dating aid – (bit hard to see what that girl or guy you fancy is reading if it’s on an ebook – there goes your conversation starter), a multipurpose tool, doorstop, bug swatter and floor leveler.

        But I’m being silly, but I hope you get my point.. books are far more than just the words that make them up. They are an experience.

        Young or old, people will always be willing to pay for a good experience and a sense of ownership.

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  7. Agreed. If the publishers are no longer providing any value, than why have them? They had better figure out their new role quickly though. As we are seeing with the decline of the newspaper industry, the world won’t wait for you to figure it out.

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  8. [...] – after all, they have served us well for hundreds of years now. As GigaOm’s Jordan Golson puts it, “There’s nothing quite like going into a bookstore and browsing the shelves looking [...]

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  9. Mishan Kontroll Monday, August 31, 2009

    The New Yorker’s review of the Kindle was pretty interesting and made some very good points about its limitations:
    http://www.newyorker.com/reporting/2009/08/03/090803fa_fact_baker

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  10. [...] books – after all, they have served us well for hundreds of years now. As GigaOm's Jordan Golson puts it, "There's nothing quite like going into a bookstore and browsing the shelves looking for your next [...]

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