Tag Archives: AAP

Borders, E-Books Sales and More

Before we get started with the weekly “news”, I have to give a shout out to Shiny Book Review and say “thanks” for the wonderful review of the e-arc of Dave Freer’s middle grade/early ya novella, Without a Trace.  You can check out the review here.  The final version of Without a Trace will be available shortly from NRP.

Now to the latest news from the industry front.  We may as well start with Borders.  I have to say, I’m thrilled to see that the bankruptcy judge is not just rolling over and letting Borders do as it wants.  Instead of approving the bonuses Borders wanted to pay its executives, bankruptcy court judge Martin Glenn said the Borders lawyers needed to negotiate with the U. S. Trustee to figure out something different from what had been proposed.  I applaud the judge for remembering the workers in the trenches at Borders, those who have given so much, often for a number of years, with little consideration from upper management of late.  “If this business goes down the toilet bowl, there are a lot of full or part-time employees who face the prospect of going out of work,” Glenn said.

The U. S. Trustee also deserves a pat on the back for realizing that these bonuses are premature at best, especially considering the fact that Borders has yet to show to the court — or its employees — how it will reorganize or pay its creditors.

But that’s not all the news concerning Borders this week.  According to CoStar, Borders has begun filing papers with the bankruptcy court to amend or cancel a number of its leases.  Let’s remember that Borders already has received approval from the bankruptcy court to close 226 stores.  In the last three weeks, it has filed papers seeking approval to cancel another 12 leases.  It is generally accepted that Borders will seek to cancel the leases on approximately 50 stores above and beyond the 226 already slated for closure.  Seems to me like the numbers of store closings continues to increase.  Is it any wonder why the U. S. Trustee and the bankruptcy judge felt the proposed payment of millions in bonuses to the execs was premature?

For a list of properties Borders is requesting lease terminations on, check pages 11 – 12 here.

In a follow-up to the announcement by Amazon that it would be closing its Irving, TX distribution center, so far, that hasn’t come to pass.  There are several bills before the Texas legislature that might entice Amazon to stay.  For more information, check out this article from the Austin Statesman.

On the e-book sales front, AAP (Association of American Publishers) has announced the February sales numbers.  At first glance, things don’t look so good.  There was an overall decrease in sales to the tune of 10.6% (a 5% fall for the year to date).  Here is how it breaks down, according to Shelf Awareness.  Note the huge increase in e-book sales.

CATEGORY SALES % CHANGE 
E-books $90.3 million 202.3%
Downloadable audiobooks  $6.9 million  36.7%
Religious books $48.9 million   5.5%
Professional $42.9 million  -3.6%
Univ. press paperback  $3.2 million  -5.5%
Children’s/YA hardcover $32.4 million  -6.1%
Univ. press hardcovers  $3.5 million  -6.5%
Adult paperback $81.2 million -24.6%
Children’s/YA paperback $26.1 million -25.9%
Audiobooks  $5.9 million -33.2%
Adult mass market $29.3 million -41.5%
Higher education $24.9 million -42.9%
Adult hardcover $46.2 million -43%

Finally, don’t forget to check out our two newest titles:  Want by Jay Caselberg and Skipping Stones by Darwin Garrison.

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Friday Morning News

Let’s start with the good news.  AAP (Association of American Publishers) has announced the January sales figures.   Once again, e-books sales rose, although the rate wasn’t as fast as in previous months.  Also posting increases were downloaded audio books, religious and professional books.  The other segments of the industry posted losses.  Here is the breakdown as reported by Shelf Awareness:

CATEGORY SALES % CHANGE
E-books $69.9 million 115.8%
Downloaded audiobooks $6.5 million 8.8%
Religious books $45.4 million 6.8%
Professional $51.8 million 1.3%
Higher ed $382 million -1.4%
Children’s/YA hardcover $31.2 million -1.9%
Audiobooks $7.3 million -6.7%
Univ. press paperback $6.2 million -7.8%
Adult hardcover $49.1 million -11.3%
Univ. press hardcover $3.9 million – 14%
Children’s/YA paperback $25.4 million -17.7%
Adult paperback $83.6 million -19.7%
Adult mass market $39 million -30.9%

Dream Treader Press: My Life After Life by Kenneth Stoller, Galen Stoller

Square Fish: Bad Kitty vs. Uncle Murray

Putnam: Lucifer's Tears by James Thompson

The Penguin Press: The Beauty of Humanity Movement by Camilla Gibb

Algonquin Book Club

Tarcher: Transcendence by Norman Rosenthal Ph.D.

News

Image of the Day: Yamaguchi’s Latest Olympic Performance

On Monday before an SRO crowd at Books & Greetings, Northvale, N.J., Olympic skating star Kristi Yamaguchi had a clean program promoting her new book, Dream Big, Little Pig! (Sourcebooks Jabberwocky). Here Yamaguchi appears with owner Kenny Sarfin.

 

 

Hachette: The Fifth Witness by Michael Connelly

AAP January Sales: E-Books Rise Again but Pace Slows

Total net sales of books in January fell 1.9%, to $805.7 million, as reported by 85 publishers to the Association of American Publishers. Continuing the pattern of the past year, digital categories had the biggest sales growth: e-book sales rose 115.8%, to $69.9 million, compared to January 2010. But the rate of growth for e-books has diminished from numbers so high they looked like typos. For example, a year ago, in January 2010, e-book sales of $31.9 million rose 261.2% over the same period in 2009, and, six months ago, e-book sales in July 2010 rose 150.2%, to $40.8 million, over July 2009. Still, e-book sales have grown so much that in January 2011, the category was larger than all other categories except for higher education and adult paperbacks. On the other hand, print sales still accounted for 91.3% of all January sales.

CATEGORY SALES % CHANGE
E-books $69.9 million 115.8%
Downloaded audiobooks $6.5 million 8.8%
Religious books $45.4 million 6.8%
Professional $51.8 million 1.3%
Higher ed $382 million -1.4%
Children’s/YA hardcover $31.2 million -1.9%
Audiobooks $7.3 million -6.7%
Univ. press paperback $6.2 million -7.8%
Adult hardcover $49.1 million -11.3%
Univ. press hardcover $3.9 million – 14%
Children’s/YA paperback $25.4 million -17.7%
Adult paperback $83.6 million -19.7%
Adult mass market $39 million -30.9%

You can see more on this from Publishers Weekly here.

On the not so positive front is the latest from Borders.  On Wednesday, Borders’ DIP filing was approved by the bankruptcy court.  PW has a breakdown of the hearing here.  But what is really interesting, imo, is the separate filing by Borders on Wednesday.  Quoting from the same PW article:  Borders contributed to speculation that it may look to a sale to emerge from bankruptcy. The court approved a motion appointing Jeffries and Company as its investment banker, but note that the company will only be paid under certain circumstances. “Jefferies shall be entitled to a Liquidation Fee with respect to any sale or liquidation of assets (whether pursuant to a Chapter 11 plan, Section 363 of the Bankruptcy Code or otherwise) if, and only if, Jefferies ran a sale process with respect to such assets and/or marketed such assets or investment concerning such assets and/or otherwise provided material services in connection with the sale or liquidation of such assets,” the order stated.

Borders has also listed 28 more stores for closure.  These stores will close by the end of May. Here is a link for the stores closing — I couldn’t get it to work this morning.  Hopefully, it will later today.  If not, here is a link to the PW notice about the closures.

— Amanda

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Borders, B&N and more

Let’s just get right to it.  Borders has announced it will make the decision this week on the fate of up to 75 more stores.  As I noted in yesterday’s post, these closures will come from the so-called super-stores.  CEO Edwards doesn’t anticipate closing any of the company’s smaller stores, including those at airports.  Of course, I don’t think he anticipated having to file for bankruptcy either, so don’t color me reassured just yet.

But what is more troubling is that Edwards has admitted that Borders still doesn’t have a business plan and he doesn’t anticipate having one until next month.  WHAT?  He and the rest of the Borders execs are deciding what stores to close — including some that were making a profit while keeping open others that were not — without a business plan in hand?  Sounds to me like he subscribes to the closing the barn door after the horses have gotten out school of thought.  Neither these decisions reassures me that Borders will emerge from bankruptcy and be able to thrive in the current market.

But there are others who apparently believe Edwards’ assertions that Borders will emerge from the cloud of bankruptcy in the near future.  After news broke about Edwards’ statement, stock for Barnes & Noble fell 8.9%, dropping stock prices to $10.70 a share.  Whether this was a knee-jerk reaction to what Edwards said or something else has yet to be seen.

With regard to the issue of libraries and e-books, the NYT has an article detailing not only the public uproar caused by Harper Collins’ decision to limit the number of times an e-book can be checked out to 26, but also how other publishers are looking at the issue.  Go check it out and let me know what you think.

Then there is this article that absolutely blew my mind this morning.  Simply put, the former president of Tribune Broadcasting, Ed Wilson, told participants at the annual meeting for the AAP that publishers need to create their own form of HULU.  That’s right HULU.  Now, part of me can only stare at the post in stunned silence wondering how in the world he can expect publishers who are digging their heels in and doing all they can to slow down — or even destroy — the e-book movement to agree to doing something that would take them into an operating system they have never before seen used in publishing.  This is the industry that hides its head in the sand whenever technology allows for new forms of delivery until they are pulled out by consumers and forced to embrace it.

Then there’s the part of me that’s laughing hysterically at the thought of these different publishers banding together and working together.  Sure, the big six have done it with regard to the agency model of pricing for e-books.  It’s entirely possible they might see this HULU-esque venture in the same terms.  Who knows.

Then there’s the author in me who wants to run screaming from this suggestion because I see it as yet another way publishers can try to hold onto my rights even after a book is no longer in print.  If you surf the web and read the blogs, you can find entry after entry by authors who have tried in vain to get their rights back from publishers after years of receiving no royalties or seeing reports where they have supposedly sold far fewer numbers than their contract says is needed to be considered “in print”, only to have the publishers refuse.

Now, do I see a publishing oriented HULU type of platform happening any time soon?  Not really.  But still, they ought to know better than to put stories like this where I can read them first thing in the morning.  It’s going to take me hours to get all the coffee out of my keyboard.

Now, must go find more coffee and get started on the rest of the work day.

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Borders Bankruptcy, Day 2 – Part 1

The dust is starting to settle, sort of, after the announcement that Borders finally did the inevitable yesterday.  It filed for bankruptcy.  It didn’t take long for journalists and bloggers — this blog included — to jump into the fray and try to figure out what this would mean to the company and to publishing as a whole.  Honestly, we aren’t going to know the full impact for months, perhaps even years.

There are some more details that started coming out about Borders during the evening and overnight last night.  None of them are really surprising — well, that’s not quite right.  One is, simply because I hadn’t thought about it before.  So, I guess I’ll start with it.

According to Shelf Awareness, the parent company for Borders in Australia and New Zealand filed for bankruptcy as well.  They do note that this company, REDGroup Retail, has not connection with the U. S. Borders.   The article notes that  it will be “business as usual, but the paper [Sydney Morning Herald] called Borders’s and A&R’s outlook ‘grim.'” You have to ask yourself what it is about the overall philosophy of the Borders brand that might be behind the brand’s downfall.

Back to the news that wasn’t so unexpected.

The American Booksellers Association issued a statement about Borders’ bankruptcy filing.  The basic premise of the statement is that the ABA hates to see any bookseller go out of business, even a big box bookseller like Borders, because such closures hurt the industry.  In an attempt to reassure not only the buying public but their own membership, the ABA reports in the same statement that the “vast majority of ABA members” had their best holiday season in years.  Between that and their partnership with Google which allows their members to sell e-books through their websites, ABA sees a positive future for the indie booksellers.  In fact, the statement says something I’ve come to believe: that the “indie bookstore model is well positioned for the future.”

While I don’t want to rain on the parades of those who have been celebrating the fact that their favorite Borders store isn’t on the list of stores slated to close under their bankruptcy filing, I have to point out that there is a separate filing by Borders which says the company may close an additional 75 stores.  The same article notes that Borders posted a loss of something in the neighborhood of $168.2 million in 2010.  If I remember correctly, it’s been something like 3 – 5 years since Borders has actually posted a profit.

Reports on the causes for the bankruptcy range from blaming the economy to blaming Amazon, Walmart and e-books and everything in-between.  I have no doubt that each of these did have an impact on Borders’ bottom line.  You can’t deny the fact that e-book sales soared last year (164.4% increase in 2010 or $441.3 million in sales in 2010.  December sales increased 164.8% or $49.5 million in sales.) according to AAP.  The only other aspect of publishing to post a profit last year was audio downloads (up 38.8% to $81.9 million).  Adult hard cover sales were down 5.1%.  Trade paperbacks were down 2%m and mass market paperbacks declined 6.3%.  Children’s books fell as well.

But this doesn’t release Borders from its responsibility in what happened.  Their financial downfall didn’t occur overnight.  The advent of the Kindle, and later the Nook and iPad, didn’t sound the bookseller’s death knell.  No, blame expansion plans that were over-ambitious and not reviewed as economic signs started pointing toward trouble ahead.  Blame the fact that Borders failed to have an effective on-line presence in a timely manner.  (Does anyone else remember how their first brilliant idea in this area was to send everyone to Amazon?  You would initially go to borders.com to order a book and suddenly find yourself redirected to Amazon.  WTF?)

Then there was their failure to jump into the e-book market until last year.  That was bad enough.  But doing so without a branded e-reader that was tied to their store was fatal, in my opinion.  Sure, you can buy e-books from other stores besides Amazon if you have a Kindle or BN.com if you have a Nook, but you know you can always get e-books from those stores and those are the stores you first think of shopping at.

Borders hasn’t posted a profit in years and yet nothing was really done to figure out, much less cure, the problem.  As a result, thousands of employees will lose their jobs.  There have been little to no consequences for those in the executive suite for their poor management of the company — at least not until it was too late.

Unfortunately, the impact of the company’s mismanagement and bad luck goes beyond the company.  The vendors — publishers and non-publishers — will feel the economic crunch.  Even if they do manage to get some sort of payment as a result of the bankruptcy filing, it very well may be too little, too late.  That will, inevitably, flow down to their employees and contractors.  Then there are the customers who are losing an already all-too-precious resource — their local bookstore.  And what about the authors and artists?  They get little enough as it is from each book sold.  That will may be cut even further because of all this.

What started as an eddy is quickly turning into a whirlpool.  Will publishing survive?  Sure.  But what it looks like when it comes out on the other side is up for grabs right now.

# # #

Part 2 will go up later today.  In it, I’ll dissect the letter sent to all holders of the Borders Reward Card by the CEO, Mike Edwards.

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The Revolution is Here

I’ve spent a lot of time and blog space over the last month or so looking at what’s been happening with the big box bookstores, Borders in particular.  Today, I’m turning my attention to some news that came out of the second Digital Book World conference in NYC.  Some of the news isn’t surprising.  Some is gratifying and some just makes me want to scratch my head and wonder when the ostriches are going to finally pull their heads out of the sand.

A little background data to start.  AAP (The Association of American Publishers) announced earlier this month the sales figures for November.  Overall book sales were up 5.1% over a year ago and up 3.5% for the year-to-date.  Sounds good.  Not great, but good.  The adult hard cover sales were up 4.3% over the numbers for a year ago but — and this is a big but — down 6.1% for the year-to-date.  Adult paperback sales were down — 19% for the month and 1.4% for the year-to-date.  Adult mass market paperbacks were down 9.5% for the month and 14% year-to-date.  E-book sales, on the other hand, were up 129.7% for the month and 165.6% year-to-date.  With this in mind, let’s look at some of the comments coming out of the conference.

According to Forrester analyst James McQuivey, in a recent survey, 89% of the publishers responding said they were “optomistic” about how the digital revolution would impact the industry.  Of those, 83% said they were ready to compete in this changing market.  It is interesting to note that, even as he said this, he had to amend it by saying that not all of those proclaiming readiness had a plan yet.  Sorry, that sounds to me like they were trying to answer what they thought teacher wanted to hear, not answer truthfully. (Note in this same article that Shelf Awareness comments that e-reader prices have dropped close to the $100 mark a full 2 years earlier than Forrester had predicted.  A clear indication, in my opinion, that the revolution is not only here but is pounding on the doors of traditional publishers, demanding to be let in.)

Sarah Wendell, from Smart Bitches, Trashy Books, attended the CEO panel and asked what turned into the firestorm question.  Simply put, she asked McMillan president, Brian Napack, when McMillan would allow its e-books in libraries.  Instead of giving a direct answer, Napack said McMillan is still “making library borrowing a possible business model for them.”

I’m sorry, but WTF?  It’s called OverDrive and a number of publishers are using it for audio and e-book downloads through local libraries.  I think Jane Friedman, CEO of Open Road Integrated Media, had it right when she responded that library lenders are potential customers.  I’ll add to that and say that library borrowers are as well.  In this day and age of ever increasing costs for books — both dead tree version and digital — a lot of people will borrow a book from a library before buying it.  BUT, if they like the book, they will go out and purchase it and others by that particular author.  This is especially true, in my experience, with regard to new authors.

But wait, I shouldn’t be surprised by this head in the sand stance from Napack.  Anyone remember the Agency Model pricing scheme for e-books?  If you don’t know what I’m talking about, google “agency model” or just look at Amazon.  If you see “price set by publisher” when looking at a book for your kindle, you can rest assured that Amazon had nothing to do with setting the price and couldn’t put it on sale if they wanted to.  Nor can any other digital outlet. (Yes, you guess right, I abhor the agency model.)

Galleycat adds this from the conference:  Goldman Sachs’ Barnes & Noble analyst/managing director Matthew Fassler had some gloomy predictions: “The economics of the digital business for B&N today looks a lot worse than it should. eBooks should be making more money when you think about the lack of physical inventory and the agency model. The startup costs to enter this market are enormous, but we are concerned that it is not making enough money, which reflects a competitive marketplace.”

E-books have been available for download from public libraries for awhile now.  OverDrive, which I first became aware of through downloads of audiobooks through my library, also allows for the download of e-books in EPUB format to those libraries who subscribe to their service.  The books are DRM-protected and, like any library book, you check them out for a period of time and at the expiration of that time, they are no longer available to you.  It is an answer to a market demand.  A demand publishers like McMillan have been ignoring since the beginning of the digital “revolution”.

Like it or not, these publishers need to read the writing on the proverbial wall.  Sure, e-book sales are still a small percentage of the overall market.  But that percentage is increasing by leaps and bounds at a time when most of the rest of the market is falling.  This is the time for the publishers — and authors — to embrace e-books.  Authors who have backlists where the rights have reverted to them should consider either e-publishing the books themselves or finding a digital publisher to do it for them.  I say digital publisher not only because, gee, I work for one but because, as an author, I appreciate the fact that most digital publishers pay much higher royalties than traditional publishers do.  Conversely, those publishers still retaining the e-rights to these backlists should put them out.  There is a market for these books, if only they would tap into it.

Like it or not, the revolution is here.  Those holding the door against it will either be overrun and possibly lose the battle — and possibly their companies — or they will finally see the light and do their best to embrace it.  The only question then is if they’ve waited too long.

Viva la Revolucion!

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Latest Industry Numbers

The AAP (Association of American Publishers) has released the sales figures for October.  I predict there are going to be some very unhappy bean counters sitting in their offices today trying to figure out what’s going on.  Or maybe not.  Maybe they will stick their heads in the sand, their fingers in their ears and do their best to ignore the trends, hoping the holiday season will save them.  The trouble with that is it might be a short term solution, but it won’t cure what ails the industry.  The only things that will are for the publishers to start accepting the fact that e-books are here to stay and their business models need to be adapted to reflect it AND they have to quit trying to drive the market with novels they think are socially relevant and give readers novels that entertain.

Don’t get me wrong.  There is a place for literature and “socially relevant” fiction.  But it hasn’t been and, I think, will never be the money-maker they want it to be.  There’s nothing wrong with fiction having a message, as long as you don’t hit the reader over the head with that message over and over again until they black out.  Most people read for entertainment — the same reason they watch movies or TV.  That is something we, as publishers, have to remember.

Any way, for the figures.  October wasn’t a good month for most segments of the publishing industry.  Only four areas showed an increase in sales over those reported a year ago.  Higher education books were up 12% over Oct. 2009.  Children’s and YA hardcover books were up 13.9%.  Downloaded audiobooks were up 20.7% and e-books were up a whopping 112.4% over October 2009.

For the year-to-date figures, things don’t look much better.  K-12 (kindergarten to high school) books are up 3.8% over the Jan – Oct figures for 2009.  Higher education is up 10.6%, professional books up 8.4%, university press paperbacks up 4.1%, university press hard covers up 1.9%, downloaded audiobooks up 38.6% and e-books up 171.3%.  Adult paperbacks were down for October but show no change for the month-to-date.  Every other category has fallen.

What is really interesting, at least to me, is to see the progression of e-book sales since 2002. The following is the graph AAP included in this month’s report:

I know it’s small but, basically, the figures from 2007 to present are what are the most telling.  In 2007, as e-book readers were beginning to hit the market, e-books represented 0.58% of the total sales figures for the year.  That increased in 2008 to 1.19%.  This corresponds to the release of the first generation of the Kindle in November 2007.  in 2009, e-books sales increased to 3.37% of total sales and, in the first 10 months of this year, e-book sales represent 8.7% of sales.

Digital downloads, whether of e-books or audiobooks, are here to stay.  What is up in the air is how the major publishers adapt.  If they continue forcing DRM onto their e-books and not listening to what readers want, it won’t stem the tide.  At least not for long.  What it will do is continue cutting into their profits and the livelihoods of their authors. Here’s hoping a happy medium is found soon, for everyone’s sake.

 

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A Firestorm Revisited & Other News

Last week the internet was ablaze with the Cooks Source debacle.  For those who might not know what I’m referring to, here’s my post on it.  There are links in the post where you can find more background information.   Since then, the folks at Cooks Source have issued an apology (of sorts).

I say “of sorts” because they still don’t admit they did anything wrong in using an article without permission or recompense.  Nor have they addressed the comment made by their representative that anything on the internet is in the “public domain”.  You can read their statement here.   I happen to think John Scalzi’s comments about it are dead on point, especially when he states that Cooks never would have addressed the issue had the internet gone viral about what happened.

In other news, Hell must be a bit colder this week.    The New York Times has announced that it will begin listing a best sellers list for both fiction and non-fiction e-books after the first of the year.   According to the article, the lists will be  “compiled from weekly data from publishers, chain bookstores, independent booksellers and online retailers, among other sources.”  One of those “other sources” is RoyaltyShare.  It will be interesting to see just how complete the data will be when compiling these lists.

Going hand in hand with the news from the NYT is the AAP’s (Association of American Publishers) release of September’s sales figures.  E-book sales increased 158.1% over September 2009.  The only other areas showing an increase were downloaded audiobooks (73.7%), university press paperbacks (10.6%), higher education (2.2%), and professional books (0.7%).

“The Adult Hardcover category was down 40.4 percent in September with sales of $180.3 million, and sales for the year-to-date down by 8.1 percent. Adult Paperback sales decreased 15.8 percent for the month ($111.5 million) but increased by 1.5 percent for the year so far. Adult Mass Market sales decreased 23.6 percent for September with sales totaling $67.8 million; sales were down by 15.7 percent year to date.”

The year-to-date figures for e-book sales shows an increase of 188.4%.  While that is still a small part of a traditional publisher’s overall sales, that figure is growing.  The fact is this trend is only going to increase.  E-book readers are becoming more affordable.  Tablets such as the iPad also make reading e-books more attractive to readers than sitting at their desk reading off their PC or Mac.  E-books are here to stay.  The only real hurdle still left to clear — leaving aside the elephant in the room called DRM — is how long it will take for an industry standard format to be decided upon.

Until that happens, we’ll continue to offer our e-books in a variety of different formats and all will be DRM-free.

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