Thursday, January 28, 2010

Game Changer

STATUS: I’m not at the office late. That’s news!

What’s playing on the iPod right now? IT’S THE END OF THE WORLD AS WE KNOW IT by R.E.M

Unless you’ve been living under a rock, you should have heard the news by now. Apple had released its new tablet PC called the iPad. Think bigger, badder iTouch.

Just in case you just crawled out from under that rock, here’s a link to get you up to speed.

Most folks in the industry see the Apple announcement as a game changer—a company big enough and nimble enough to give Amazon a run for its money in terms of being the dominant player of eBooks.

As agents, the electronic rights playing field is literally shifting daily. (Ah, where did those sleepy days of just doing book deals go?)

One can imagine that The Goog will not be too far behind…

What this all means for the future is not entirely clear and I’m actually not going to speculate in this entry.

What I do want to say is this. This is the first time I’ve had to do a major shift in a negotiation literally mid-stream because of a news announcement.

In short, previously publishers have sold books to an entity like Amazon wholesale. In other words, the entity has bought a certain number of “books” in bulk at X discount. Then an entity like Amazon takes the ebooks and makes them available at a price they deem (which has been $9.99).

Apple’s announcement is changing the way publishers will be doing business moving forward. Instead of buying wholesale, Apple is saying “hey, we’ll simply be a portal for you to sell your books and we are going to ask for a 30% commission for the privilege. You get to keep the other 70% (with the main caveat that the eBook not be priced over $14.99)

On the heels of this news, Amazon announced a similar structure.

I see all of you are starting to do the math in your heads. Why should an author be stuck with a crappy 25% of net amounts received in this kind of deal?

Why do we need one lump catch-all royalty at all?

Some other random thoughts as I contemplate the massive changes publishing is going to undergo in the next five years.

1. eBooks are unreturnable. There would be no need for a publisher to hold a reserve against returns on that format. Language should be inserted in the contract addressing just that.

2. Will advances go the way of the dinosaurs? If so, what will become the main factor for choosing one “publisher” over another?

3. Will publishers finally update the royalty statement accounting periods? If eBook becomes primary format, there is no need to be 6 months behind (so as to account for returns according to publishers) in the generating of statements and the paying of royalties earned. There is no reason not to do this monthly.

And these are just a few things that immediately pop to mind…..